Pillar Guide · Updated June 2026

UK Leasehold Reform 2026/27: Ground Rent Ban, Lease Extension and Commonhold Explained

The Leasehold and Freehold Reform Act 2024 is the most significant overhaul of leasehold law in decades. This guide explains the ground rent ban on new regulated leases, the removal of marriage value from lease extension premiums, cheaper statutory lease extensions, collective enfranchisement rights, the transition to commonhold, service charges reform, managing agent regulation, and what these changes mean for your property cost, control and wealth. Whether you are an existing leaseholder, a buyer, or a potential freeholder, understanding the 2024 Act will shape your financial and legal position for years to come.

Last updated: 15 June 2026Last reviewed: 15 June 2026How we verify

The Leasehold System Overview

In England, most flats and many houses are owned on a leasehold basis. This means you own the right to occupy and use the building for a set term (e.g., 125 years or 999 years) but not the land beneath it. The freeholder (or landlord) retains ultimate ownership and collects ground rent -- a fee paid annually, often a small amount but potentially escalating over time. The leaseholder pays for maintenance via service charges, manages the property and eventually owns a diminishing asset as the lease term shortens.

Historically, leasehold has created friction and cost. Leaseholders cannot freely extend their lease without negotiating with the freeholder; marriage value (the benefit of a longer lease) is split with the freeholder, inflating extension costs; ground rent can escalate; and service charges have lacked transparency. The Leasehold and Freehold Reform Act 2024 (which received Royal Assent in May 2024) aims to rebalance this relationship.

This guide covers the key changes that affect you as a leaseholder, buyer or freeholder. The reforms are phased in over 2026 and 2027, so timings matter.

The Leasehold and Freehold Reform Act 2024

The Act received Royal Assent on 24 May 2024 and introduces sweeping changes. Key pillars are:

Ground rent ban: new leases granted from late 2026/early 2027 must have zero or nominal ground rent (max GBP 10/year).
Marriage value removal: lease extensions for properties with ground rent up to GBP 500/year no longer include marriage value, cutting extension costs.
Lease extension fees: statutory costs capped and procedures streamlined; statutory notice period reduced from 2 months to ~4 weeks.
Commonhold: easier conversion to commonhold ownership (residents collectively own the freehold); target of widespread adoption by 2030.
Service charges: reformed rules on transparency, approval of major works, and leaseholder rights to challenge unreasonable charges.
Managing agents: new regulation and code of conduct; leaseholders gain stronger rights to challenge fees and demand standards.
Forfeiture restrictions: more stringent conditions to forfeit (lose) a lease for ground rent arrears.

Regulations are still being developed and will be laid before Parliament in 2026. This guide reflects the current expected position, but precise timings and detail may shift. Always check gov.uk for the latest.

Ground Rent Ban for New Leases

From late 2026 or early 2027 (exact date to be confirmed in regulations), any new lease granted on a residential property must have ground rent of zero or no more than GBP 10 per year. A GBP 10 cap is nominal ground rent and is allowed; any more triggers the ban.

What does this mean for you?

If you are buying a new flat: expect no ground rent or a nominal GBP 10/year from the ban date onwards. This cuts long-term costs and removes a major annual drain on leaseholders.
If you already own leasehold: your existing lease is unaffected unless you extend, vary, or enfranchise it. Then the new terms apply -- and if you extend, you can ask for zero ground rent.
If you are a freeholder: new leases granted from the ban date cannot include meaningful ground rent, which changes the investment return model. Many freehold-house conversions will use the commonhold model instead.

The ban does not apply to commercial leases or leases outside England. It does not retroactively cancel ground rent on existing leases, but it removes a major cost wedge from the housing market.

Lease Extension Rights and Costs

Most leaseholders have the statutory right to extend their lease by 90 years under the Leasehold Reform, Housing and Urban Development Act 1993. To exercise the right you must:

Own the property for at least 2 years (or be the third freeholder-qualifying person).
Have a lease with at least 21 years remaining.
Follow formal statutory notice and valuation procedures.

The Cost of Extension

The cost of a lease extension depends on:

Property value: higher-value properties attract higher premiums.
Unexpired term: a lease with 35 years left is more valuable than one with 10 years; the shorter the lease, the more you must pay to extend it.
Ground rent: the higher the annual ground rent, the higher the premium.
Marriage value: the uplift in value from extending the lease -- but see below for the key 2024 change.

Professional fees (surveyor and lawyer) typically add GBP 1,500 to GBP 3,500 depending on complexity and negotiation.

Statutory vs Voluntary Extension

You can also negotiate a voluntary extension with the freeholder -- for example if the lease term is less than 21 years and you have no statutory right. Negotiated terms can be more flexible, but the statutory formula is the market benchmark.

Marriage Value Abolition: The Game Changer

Marriage value is the increase in a property's value attributable to extending the lease. Under old rules, this benefit was split 50--50 with the freeholder, significantly inflating the leaseholder's premium. The Leasehold and Freehold Reform Act 2024 abolishes marriage value entirely for leases with ground rent at or below GBP 500 per annum.

Impact on Your Extension Cost

Most residential properties have ground rent well below GBP 500/year, so the majority of leaseholders will save significantly. For a property that might have cost GBP 15,000 to extend under the old formula, the new cost could be GBP 6,000--10,000. This is a step change in leaseholder wealth and affordability.

Example: A flat worth GBP 400,000 with 45 years on the lease and GBP 150 annual ground rent. Under old rules, marriage value might have added GBP 80,000 to the premium, of which 50% (GBP 40,000) went to the freeholder. Under the new rules, that GBP 40,000 is eliminated, so the total extension premium drops sharply. Use the lease extension calculator to model your own scenario.

For leases with ground rent above GBP 500/year, marriage value is still calculated and split 50--50, but this affects a smaller pool of properties, mostly older buildings or commercial leases.

This change is expected to come into force in 2026/27 and will apply to new extensions and enfranchisements from that date.

Collective Enfranchisement: Buying the Freehold

Collective enfranchisement is the right for a group of leaseholders to buy the freehold building collectively under the Leasehold Reform, Housing and Urban Development Act 1993. Once enfranchised, the leaseholders (via a Nominee Company or Right-to-Manage company) own the freehold and control service charges, major works and ground rent (which then does not apply).

Who Can Enfranchise?

For a building with at least 2 units:

At least 50% of resident leaseholders must agree to enfranchise (lower thresholds for mixed-use or larger buildings).
Leases must be at least 21 years long.
The building must be self-contained residential units.

The Cost

The purchase price is determined by valuation and typically reflects:

The open-market value of the freehold in its current state.
An allowance for the freeholder's loss of ground rent and reverting the property when all leases end.
Property size and type.

For a medium-sized building, the enfranchisement premium can run from GBP 100,000 to over GBP 500,000, shared among leaseholders. The Leasehold and Freehold Reform Act 2024 aims to reduce this burden by adjusting the valuation formula, though the detailed regulations are still being finalized. Once enfranchised, you own the freehold collectively, control service charges, and can manage major works more transparently.

Commonhold: What It Is and Timeline

Commonhold is an ownership model where a building is owned collectively by its residents through a Commonhold Association (CA). Each resident owns their unit freehold-equivalent and shares ownership and control of common areas (roof, lobby, lifts, etc.) through the CA. There is no ground rent, no freeholder, and no long-term lease -- you own your unit outright and participate in decisions on service charges and major works.

Commonhold in Law vs Practice

Commonhold has existed in English law since 2002 but has been rare due to technical obstacles and lack of market awareness. The Leasehold and Freehold Reform Act 2024 removes barriers:

Easier conversion of existing leasehold buildings to commonhold.
Commonhold is to become the default model for new multi-unit residential buildings from a date to be set (expected 2030).
Simpler procedures for leaseholders to trigger conversion.

Benefits and Challenges

Benefits: no ground rent, no lease decay, direct control of service charges and major works, clearer decision-making, no freeholder veto.

Challenges: requires leaseholder commitment to collective governance, resale may be slightly slower (smaller pool of buyers familiar with commonhold), conveyancing is new to many solicitors, and the Commonhold Association must be run competently.

The 2024 Act aims to make commonhold the norm for new buildings and gradual conversion for older stock. Regulations on conversion procedures are expected in 2026/27.

Service Charges Reform

Service charges (also called maintenance charges or ground rents where they relate to upkeep) have long been a source of leaseholder frustration. The Leasehold and Freehold Reform Act 2024 introduces stronger protections:

Transparency

Freeholders and managing agents must provide clear, itemized service charge accounts.
Leaseholders have a right to inspect invoices and contracts.
Estimated charges must be reasonable and justified.

Major Works Approval

For works costing more than a threshold (e.g., GBP 5,000--10,000 per unit), leaseholders must receive advance notice and a schedule of works.
Leaseholders have a right to request competitive quotes.
Disputes can be escalated to the First-tier Tribunal.

Challenge Rights

Leaseholders can challenge unreasonable or breaching service charges. Many disputes that previously required court action can now go to the First-tier Tribunal at lower cost.

Managing Agent Regulation and Standards

Managing agents look after day-to-day property management on behalf of freeholders and leaseholders. They have often operated with few safeguards or standards. The 2024 Act introduces regulation:

Code of Conduct: managing agents must comply with an approved code, covering transparency, complaints handling, professional conduct and client money protection.
Fee controls: managing agents must justify fees and cannot charge unreasonably. Leaseholders can challenge and the tribunal can intervene.
Complaints: leaseholders have a right to escalate complaints to an ombudsman or tribunal.
Right to Switch: easier for leaseholder groups to change managing agent or take over management themselves via a Right-to-Manage company.

These changes aim to drive up standards, protect leaseholders from predatory fees, and ensure managing agents are accountable to residents as well as the freeholder.

What Leaseholders Should Do Now

1. Check Your Lease Term

If your lease has less than 80 years remaining, the property becomes harder to mortgage and less valuable. If you have the right to extend (own for 2+ years, lease 21+ years remaining), consider serving extension notice soon. The marriage value abolition (2026/27) will make extensions cheaper, but act early to avoid the rush.

2. Review Ground Rent

If your ground rent is escalating (doubling every 10 or 20 years), it is a problem. Note the escalation clause, the current rate, and when the next increase is due. Enfranchisement or lease extension (with zero ground rent under new rules, if applicable) are routes to eliminate this.

3. Gather Fellow Leaseholders

If you are in a multi-unit building with high ground rent, escalating charges or a poor managing agent, collective action (enfranchisement or Right-to-Manage) is powerful. Form a residents' association, survey opinion and get legal advice on feasibility.

4. Understand Service Charges

Request itemized service charge accounts. Check for errors, unreasonable items and breaches of transparency rules. Challenge via the managing agent, freeholder or tribunal if needed.

5. Monitor Regulations

The detailed regulations under the 2024 Act are being laid in 2026. They will set exact commencement dates for the ground rent ban, marriage value changes, commonhold conversion procedures and service charge rules. Follow gov.uk and government consultations closely.

Official References

FAQs

When does the ground rent ban take effect?

The ground rent ban under the Leasehold and Freehold Reform Act 2024 applies to new leases granted from a date to be specified in regulations (expected late 2026 or early 2027). For new leases granted from that date, the ground rent payable on a regulated lease must be zero or nominal (defined as no more than £10 per year). Existing leases are not automatically affected unless they are varied, extended or enfranchised. Enfranchisement of leasehold into freehold is encouraged and offers a route to eliminate ground rent for sitting tenants.

How much will a statutory lease extension cost in 2026/27?

The cost of a statutory lease extension depends primarily on the property value, the unexpired term of the lease, and ground rent. The critical change is that marriage value (the uplift in property value attributable to extending the lease) is now removed from the premium calculation for extensions to leases at or below £500 per annum ground rent. For properties above that threshold, marriage value still applies at 50% of the increase (shared as to 50% to the leaseholder). Legal and surveyor fees typically add 5--15% to the premium. Use the lease extension calculator to estimate the cost for your property.

What is commonhold and when will it be available?

Commonhold is a form of ownership where leaseholders collectively own the freehold through a Commonhold Association (CA), eliminating ground rent and providing direct control over service charges. It is not new in law but has been rare in practice due to obstacles. The Leasehold and Freehold Reform Act 2024 eases conversion to commonhold, which is intended to become the standard model for new multi-unit buildings. The government has set an objective for 2030, but the detailed regulations and transition mechanisms are still being developed. Existing leaseholders may have the right to convert to commonhold under future rules.

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How do I extend my lease if the freeholder will not agree?

Leaseholders have a statutory right to extend their lease under the Leasehold Reform, Housing and Urban Development Act 1993. To exercise this right you must own the property for at least two years, the lease must be at least 21 years long, and you must follow a formal procedure: serve notice on the freeholder, obtain a professional valuation, negotiate or go to the First-tier Tribunal for a determination of the premium. If the freeholder does not agree within two months, the tribunal adjudicates the price and terms. The statutory route is cheaper and quicker than court but still requires legal and surveyor costs. From 2026/27, the marriage-value change applies, lowering costs for many.

What is marriage value and how has it changed?

Marriage value is the increase in a property's value that flows from extending a lease. Old rules applied it to all lease extensions, splitting the benefit 50--50 with the freeholder (reducing the leaseholder's premium). The Leasehold and Freehold Reform Act 2024 removes marriage value entirely for leases with ground rent at or below £500 per annum — a huge saving for those leaseholders. Above £500 per annum, marriage value is still calculated at 50--50 split. This change significantly reduces the cost of lease extensions for most residential properties, particularly those with historic low ground rent.

Can leaseholders club together to buy the freehold?

Yes. Collective enfranchisement is a right under the Leasehold Reform, Housing and Urban Development Act 1993. A group of leaseholders (at least 50% of resident leaseholders, or a smaller proportion in mixed-use buildings) can serve notice jointly on the freeholder, triggering an obligation to sell the freehold to a nominee company for a purchase price determined by valuation. The right applies to buildings with at least two self-contained units; leases must be at least 21 years. The premium depends on the open-market value of the freehold, property size and the expected loss to the freeholder. Once enfranchised, the residents own the freehold collectively and control service charges.

How does the freeholder negotiate lease extension costs?

Where a leaseholder and freeholder negotiate voluntarily (not via the statutory route), they are free to agree any terms. However, since 2024 the market expectation is aligned to the statutory premium formula, which now excludes marriage value for leases below £500 per annum ground rent. A reasonable negotiated settlement will be at or close to the statutory basis, accounting for legal and professional fees (typically GBP 1,000--3,000 depending on complexity). If negotiations stall, either party can force the issue by serving statutory notice and going to the tribunal. Many leaseholders are now leveraging the marriage-value abolition to extract better terms.

What is the risk of forfeiture if I fall behind on ground rent?

Forfeiture is the freeholder's right to reclaim the property and terminate the lease if the leaseholder breaches its terms (e.g., fails to pay ground rent). However, the Leasehold and Freehold Reform Act 2024 has restricted forfeiture rights: ground rent arrears must exceed a threshold (set to rise) or three months late before forfeiture can be threatened, and the process requires strict statutory notice and an opportunity to remedy. For most residential properties, forfeiture is rare and lenders will not lend on a property at immediate risk. Pay ground rent on time, address any arrears quickly and consider enfranchising to eliminate the risk entirely.

How does the Building Safety Act interact with leasehold reform?

The Building Safety Act 2022 requires that high-rise residential buildings (7+ storeys, 21+ units) have a Building Safety Regulator and follows a gateway regime for major works. It sits alongside leasehold reform but addresses a different issue: safety and standards, not tenure. A building subject to the BSA will still be subject to leasehold reform — ground rent bans, lease extensions, enfranchisement and commonhold rules apply as normal. However, a leaseholder in a building under the BSA may find that major structural works (e.g., cladding removal) are mandated by the regulator, and the cost recovery via service charges is a separate concern. Resolving both tenure and safety is important for high-rise leaseholders.

Do the leasehold reform rules apply in Wales and Scotland?

No. The Leasehold and Freehold Reform Act 2024 applies in England only. Wales has its own leasehold law (under the Law of Property Act 1925 and the Leasehold Reform Act 1967 as extended), with some parallel rights to extend leases and enfranchise, though the terms and thresholds differ. Scotland does not have "leasehold" in the English sense -- residential property is typically owned outright ("sasine") or via long leases with community ownership models. If you own leasehold property outside England, you must refer to the law of that jurisdiction.

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About the author

Emma Clarke

UK Tax Writer

Emma Clarke has been writing about UK personal tax since 2018, with a particular focus on Self Assessment, PAYE coding and the practical mechanics of how HMRC actually applies the rules to ordinary salaries. Her work concentrates on translating the dense language of HMRC manuals and Finance Act schedules into worked examples that show, pound by pound, how income tax and National Insurance reduce a gross salary to the figure that lands in a UK bank account. Emma covers the full PAYE lifecycle: tax codes (1257L, BR, K codes, emergency codes), the Marriage Allowance, the High Income Child Benefit Charge, salary sacrifice arrangements and their effect on pensionable pay, the Apprenticeship Levy, and the differences between the rUK and Scottish income-tax regimes. She is particularly interested in the edge cases that catch PAYE employees out — the £100,000 personal-allowance taper, the 60% effective marginal rate it creates, and the interaction between student-loan plans and pension contributions. Every figure in Emma's articles is verified against the current HMRC rates pages and worked through a Self Assessment calculation by hand before publication. She writes to CalcHub's editorial standards: primary-source citations, plain English, no promotional language, and clear "this is general information, not financial advice" disclaimers where appropriate.

Personal-finance writer since 2018
UK tax specialism — PAYE, Self Assessment, National Insurance
Writes to CalcHub editorial standards (primary-source citation, annual review)

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Disclaimer: This guide reflects UK leasehold reform law as expected to take effect in 2026/27 in England. The Leasehold and Freehold Reform Act 2024 has received Royal Assent, but detailed regulations and commencement dates are not yet finalized. The guide is illustrative and does not constitute legal or financial advice. Leasehold and freehold law is complex and fact-specific. Property and lease decisions -- including extension, enfranchisement, commonhold conversion and managing agent challenges -- should be taken with professional legal and survey advice. Refer to gov.uk for current official guidance, and consult a qualified surveyor and solicitor.