Around 5 million homes in England and Wales are leasehold, and for many of those owners, the arrangement has become a source of real financial strain. That figure, from the government’s own leasehold toolkit for England, covers mostly flats, but it also includes a growing number of houses sold on leasehold terms in recent years. What that means in practice is that millions of people are paying ground rent, service charges, and extension fees for a home they don’t technically own outright — and the costs can spiral in ways that catch even careful buyers off guard.
I’ve been writing about UK property for long enough to see the same pattern repeat: someone buys a leasehold flat, assumes the annual charges are fixed, and then gets hit with a major works bill or a ground rent review that doubles their outgoings overnight. The system has felt stacked against the leaseholder for decades. But the legal landscape is shifting faster now than at any point in my time covering this beat. The Leasehold and Freehold Reform Act 2024 is already law, and a draft Commonhold and Leasehold Reform Bill published in January 2026 proposes even bigger changes — including a cap on ground rents and a ban on most new leasehold flats. Here’s what you actually need to know.
If you’re currently navigating a lease extension or trying to understand your service charge breakdown, you’re not alone. I’ve covered the practical side of buying a flat in detail before, including understanding the fine print on service charges, which is one of the most common pain points for leaseholders. The reforms coming down the line should make things fairer, but they won’t fix every problem overnight — and knowing what you can act on right now matters more than waiting for legislation that may take years to fully implement.
What leasehold actually means — and why commonhold changes the game
The most important thing to understand about leasehold is that you own the property for a fixed period, not the land it sits on. When the lease runs down, the value of your home drops, and extending it can cost thousands. That’s the core imbalance the reforms are trying to fix. Under the draft Commonhold and Leasehold Reform Bill, new flats would be sold as commonhold instead — a form of ownership that gives you a perpetual interest in your flat, much like owning a freehold house. Commonhold has technically existed since 2002, but take-up has been minimal because the old system was so entrenched. The government now wants to make it the default.
What I’d do if I were buying a flat today: I’d look very closely at whether the property is leasehold or commonhold, and if it’s leasehold, I’d check how many years are left on the lease and what the ground rent terms are. The reforms are real, but they’re phased — and a flat with a short lease and escalating ground rent is still a financial risk until the cap actually kicks in.
Why the ground rent cap matters for millions of leaseholders
According to government figures, around 3.8 million leaseholders in the UK are currently subject to ground rent charges. That’s not a small number — it’s roughly three-quarters of all leasehold homeowners. For many, ground rent starts at a modest £50 or £100 a year, but some leases include review clauses that double the rent every decade or link it to inflation. I’ve seen cases where a ground rent that started at £200 a year climbed past £1,000 within 20 years, making the property harder to sell or remortgage.
The draft Bill proposes capping ground rent on existing leases at £250 per year for a transitional period of 40 years, after which it would drop to a peppercorn — effectively zero. The target for full implementation of that cap is late 2028, though that depends on supplemental regulations being passed. For context, new leases granted after June 2022 are already protected under the Leasehold Reform (Ground Rent) Act 2022, which caps ground rent at a peppercorn. So if you bought a new-build flat after that date, you should already be paying nothing in ground rent. If you’re in an older lease, you’re waiting on the 2028 timeline.
What I’d do if I were facing a ground rent review right now: I’d check whether my lease includes a doubling clause or RPI-linked increase. If it does, I’d speak to a property lawyer about whether the proposed reforms give me any leverage to negotiate a voluntary reduction now, rather than waiting for the statutory cap. A property lawyer can review your lease terms and advise on the best timing for a challenge or extension claim.
Where leaseholders get caught out — and how to avoid it
The most common mistakes I see aren’t about the big things like ground rent. They’re about the smaller, less obvious traps that cost people thousands before they even realise there’s a problem. Here are the ones that come up most often.
Assuming service charges are fixed or reasonable
Service charges for building maintenance, insurance, and management are one of the biggest sources of disputes. The problem is that many leaseholders don’t realise they can challenge unreasonable charges. Under the Leasehold and Freehold Reform Act, the government has launched a consultation on strengthening protections over charges and services, including transparency requirements and regulation of managing agents. But until those changes are law, you still need to request a detailed breakdown of your service charge and compare it to similar buildings in your area. If the charge seems high, you can apply to the First-tier Tribunal to challenge it.
Waiting too long to extend a short lease
A lease with fewer than 80 years remaining starts to lose value quickly, and the cost of extending it rises sharply because of something called “marriage value” — the increase in the property’s value once the lease is extended. The High Court’s ruling in October 2025 dismissed a challenge from freeholders seeking to block the abolition of marriage value, which means that reform is still on track. But it hasn’t taken effect yet. If your lease is below 80 years, extending now under the current rules will cost more than it will once the abolition is implemented. The tricky part is that no one knows exactly when that will happen. My advice: get a valuation now, and if the cost is manageable, consider extending sooner rather than later — because waiting for reform that may be delayed could cost you more in lost property value.
Not knowing you can buy your freehold immediately
Since February 2025, the two-year qualifying period for lease extension and freehold purchase claims has been abolished. That means you can start the process the day you complete on the purchase. A lot of people still don’t know this, and they wait years before taking action, by which point the lease has ticked down and the cost has gone up. If you own a leasehold house, you may also have the right to buy the freehold outright — giving you full control and no more ground rent. The process involves serving a formal notice under the Leasehold Reform Act, negotiating a price, and potentially going to tribunal if you can’t agree. A real estate lawyer can handle the notice and negotiation for you, which is usually money well spent given the sums involved.
Overlooking the Right to Manage
If you live in a block of flats and want more control over how the building is managed, the Right to Manage (RTM) lets you take over management from the freeholder without having to prove fault. The threshold for mixed-use buildings was increased from 25% to 50% non-residential space in March 2025, which opens up RTM to many more leaseholders. You also no longer have to cover the freeholder’s legal fees when making a claim. The process involves forming an RTM company, serving notice, and following a statutory timetable. It’s not quick, but it gives you direct control over service charges and major works decisions.
| Reform | Status | Impact on you |
|---|---|---|
| No two-year wait for lease extension | In effect since Feb 2025 | You can extend immediately after buying |
| Ground rent cap at £250/year | Draft Bill, target late 2028 | Will cap existing ground rents, not yet law |
| Ban on new leasehold flats | Draft Bill, not yet implemented | New flats would be commonhold instead |
| Abolition of marriage value | High Court cleared Oct 2025 | Will reduce cost of extending short leases |
| Right to Manage threshold increased | In effect since Mar 2025 | More mixed-use buildings qualify |
What I’d do if I were dealing with any of these issues: I’d start by getting a clear picture of my lease terms — years remaining, ground rent review schedule, and service charge history. Then I’d prioritise whichever issue costs me the most money right now. For most people, that’s either a short lease or an escalating ground rent. Tackle the biggest problem first, and use the new rights as leverage where you can.
How to protect yourself — practical steps you can take now
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Check your lease for ground rent escalation clauses
Your lease document will say how and when ground rent increases. Look for phrases like “doubling every 10 years” or “linked to RPI”. If your ground rent is due to increase soon and the cap hasn’t taken effect yet, you may want to negotiate a voluntary reduction with your freeholder before the review date. Some freeholders are willing to agree to a lower fixed ground rent in exchange for a longer lease term, which can be a win-win. A tenant landlord lawyer can review your lease and advise on the best negotiation strategy.
Extend your lease before it drops below 80 years
Once your lease falls below 80 years, the cost of extending it jumps because marriage value applies. Even though the government plans to abolish marriage value, it hasn’t happened yet. If your lease is at 85 years or less, get a valuation now and consider starting the extension process. The statutory process involves serving a Section 42 notice on your freeholder, who then has a set period to respond. If you can’t agree on the premium, the First-tier Tribunal decides. The whole process typically takes 6 to 12 months.
Challenge unreasonable service charges
You have the right to challenge service charges at the First-tier Tribunal if you believe they’re unreasonable or the work wasn’t done properly. Start by requesting a full breakdown of charges and receipts from your freeholder or managing agent. If they refuse to provide it, that itself can be grounds for a challenge. Keep records of all correspondence. The tribunal can reduce your charges and order the freeholder to repay any overpaid amounts. For complex cases, a small claims lawyer can help you prepare the case.
Consider forming a Right to Manage company
If you’re in a block of flats and want control over maintenance decisions and costs, RTM is the most direct route. You need at least half the qualifying leaseholders to join the RTM company. Once formed, you serve notice on the freeholder, who has one month to respond. If they don’t object, the management transfers to you within three months. The process is statutory, so the freeholder can’t block it without good reason. The increased 50% threshold for mixed-use buildings means many more blocks now qualify.
What the future holds — commonhold and the ban on new leasehold flats
The draft Commonhold and Leasehold Reform Bill, published in January 2026, proposes banning most new long leases of flats (terms over 21 years) and making commonhold the default. That’s a fundamental shift. But the Housing Minister has said it’s “highly likely” the ban won’t be switched on in this Parliament, meaning it could be several years before new flats stop being sold as leasehold. For existing leaseholders, the Bill also proposes abolishing forfeiture — the draconian power that lets landlords terminate a lease for breach of covenant — and replacing it with a statutory enforcement process. That would remove the threat of losing your home over a missed service charge payment. The consultation on these proposals closed in September 2025, and the government is expected to publish its response in 2026.
Frequently asked questions
Can my freeholder still increase my ground rent before the cap takes effect? ▾
What happens if my freeholder refuses to extend my lease? ▾
Does the ban on new leasehold flats affect existing leaseholders? ▾
Can I convert my leasehold flat to commonhold now? ▾
What should I do if my service charge seems too high? ▾
The leasehold system has been broken for a long time, but the reforms now in motion are the most significant I’ve seen in my years covering UK property. The key is not to wait for every change to take effect before acting. If your lease is short, extend it. If your ground rent is rising, negotiate or prepare to challenge it. If you want control over your building, form an RTM company. The new rights are real — use them now, not later. If this was useful, you might also want to read expert tips for buying an apartment in the UK.
Sources and Further Reading
What to know when buying an apartment in the UK — A comprehensive guide covering lease length, service charges, and the questions every buyer should ask before committing.
Leasehold Reform Latest News 2026. HomeOwners Alliance, 2026.
UK Commonhold and Leasehold Reform Bill. Baker McKenzie, March 2026.
Leasehold toolkit for England. UK Government, 2025.
