Update on the leasehold and freehold reform act 2024 as of 7 October 2025
The leasehold and Freehold Reform Act 2024 has been partially introduced so far.
The main aspects are the removal of the two year rule. This meant that leaseholders previously had to own the property for two years prior to making an application to the freeholder for a lease extension. The right to manage (RTM) has been changed in that leaseholders no longer have to compensate freeholders for their legal fees.
These are the two main changes however there is a large part of the Act including the abolition of marriage value and the extension of standard terms to 990 years which have been delayed and are subject to legal challenges from freeholders. The government has expressed its intention to bring in secondary legislation to enact these aspects and have also intimated that Primary legislation may well be required to iron out some of the issues which were introduced when the act was rushed through at the end of the last parliament. The timing for all this remains uncertain with some estimates being between 2 to 5 years but these are based based on pure speculation.
The main changes implemented therefore are;
Two year ownership removed:
Leaseholders can now claim a lease extension as soon as they purchased the property. This has the added benefit that assignment of the notice is no longer required as this introduced additional expense.
Right to manage:
The qualifying criteria have been broadened and leaseholders no longer have to compensate the freeholders fees.
Abolition of compensation of freeholder fees:
Under the current system freeholders fees are compensated by the leaseholder both for lease extensions and freehold collective enfranchisement. The The leasehold and Freehold Reform Act 2024 seekd to remove this requirement. the problems here are that where a premium is less than the fees then freeholders will lose money when a leaseholder extends their lease. This is another aspect of the new legislation that has not been well thought through and the possible reason for delays in its introduction.
The delayed aspects are as follows:
Abolition of marriage value:
This is a significant change to how valuations are carried out. For leases with less than 80 years a marriage value is applied at the end of the calculation. The marriage value is essentially the difference between the value of the flat with a short lease and the value of the flat with the extended lease. Half the marriage value is paid by the leaseholder to the freeholder during a lease extension and the other half which is in the value of the flat is retained by the leaseholder. The 2024 act is seeking to abolish marriage value entirely for the freeholder. This would mean that the leaseholder would retain the full value of the marriage value and no payment in financial terms would be made to the freeholder at the end of the lease extension process. The implementation timeline for this is uncertain and legal challenges are ongoing. Given the significant amounts of money involved it is likely legal challenges will be in place for some time.
It is also worth considering that leases with 80+ years will be unaffected by the introduction of this measure.
990 year lease extensions:
The act aims to introduce 990 year lease extensions and this aspect has been delayed. In the recent 2022 Ground Rent Bill for lease extensions outside the Act freeholders are prevented from increasing ground rents. Existing ground rents can be retained up the expiry of the original term and then revert to nil. The Leasehold Reform 2022 Ground Rent Bil was introduced mainly to tackle the introduction of doubling ground rents by some freeholders.
What are the causes for the delay in implementation of further part of the act?:
Freeholders have brought a judicial review against the Leasehold and Freeholder Act 2024 and this was granted permission to proceed by the High Court in January 2025.
Further legislation:
The government is required to bring further secondary legislation to enforce the remaining parts of the act and the legal challenges have caused delays to this.
What is next for leaseholders?
Leaseholders should consider that the main reforms are still to come into effect and there will be further delays which may be between two and five years or even longer depending on whether a conclusion can be brought to the legal challenges. Leaseholders should consider that for leases above 80 years the premium will be largely unnafected by the =abloshon of marriage value.
The government has committed to bringing forward the necessary regulations as soon as possible, but this will very much depend on the outcome of any legal process.
