Around 5 million homes in England and Wales are leasehold, and for years the system has been a source of frustration for many owners. Ground rents that climb without warning, short leases that eat into property value, and the threat of forfeiture have all made leasehold feel like a raw deal. The government has now published a draft Bill that aims to change much of this. Here’s what you actually need to know.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The UK housing market has seen plenty of change over the past few years, but leasehold reform is one of the biggest structural shifts on the horizon. The Draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, proposes to cap ground rents, ban new leasehold flats, and make it far easier to extend a lease or buy the freehold. Some measures are already in force. Others are still waiting. Understanding the difference matters if you own a leasehold property or plan to buy one.
What Leasehold Reform Actually Means for Owners
Leasehold means you own the property for a fixed number of years but not the land it sits on. The freeholder owns the land and can charge ground rent, service charges, and other fees. For decades, leaseholders have complained about unfair terms, rising costs, and difficulty selling properties with short leases. The reforms aim to fix those problems.
The changing shape of UK housing demand makes this reform particularly relevant. More people are living in flats, and leasehold has become the default tenure for apartments. If you’re one of the millions affected, the changes could save you thousands over the life of your lease. But not everything is law yet, and some parts of the Bill are still being debated.
Why the Leasehold System Has Been So Hard to Navigate
The current system has several features that work against leaseholders. Ground rents that double every decade or so can make a flat unsellable. A lease below 80 years starts to lose value fast, and extending it can cost tens of thousands. The threat of forfeiture means you could lose your home over a missed ground rent payment. These aren’t edge cases — they affect a significant number of the 5 million leasehold properties in England and Wales.
Take ground rent as an example. A lease signed in the 1990s might have started at £50 a year, but with a doubling clause it could now be £800. That makes the property harder to sell because lenders are reluctant to lend on high-ground-rent leases. The proposed cap of £250 a year would stop that escalation, and after 40 years the rent would drop to a peppercorn — effectively zero.
I’ve spoken to leaseholders who assumed their ground rent was fixed, only to discover a doubling clause buried in the small print. The reforms would make that kind of surprise a thing of the past. But the Bill hasn’t passed yet, and until it does, the old rules still apply. If you’re thinking of buying a leasehold property now, it’s worth weighing the current law against what’s proposed. A real estate lawyer can help you understand the terms of a specific lease before you commit.
Where Leaseholders and Buyers Often Get Tripped Up
The leasehold system is full of traps for the unwary. Here are the most common mistakes I see, and what the reforms would do about them.
Ignoring the Ground Rent Clause
Many buyers focus on the property price and monthly mortgage payment but skim over the ground rent terms. A doubling clause can turn a small annual charge into a large one within a decade. The proposed cap would limit ground rent to £250 a year, but until that’s law, you need to check the lease carefully. If the ground rent is already high or has a review clause, factor that into your offer.
Letting the Lease Drop Below 80 Years
Once a lease falls below 80 years, the cost of extending it jumps significantly because of something called marriage value — the increase in the property’s value after the extension is granted. The draft Bill would abolish marriage value entirely, making extensions cheaper. But if your lease is already below 80 years, you’re paying a premium now. Extending early, before the reforms take effect, might still save you money depending on your situation.
Assuming the Reforms Are Already Law
Some measures are already in force. The two-year ownership rule for enfranchisement was abolished in January 2025, and the Right to Manage was improved in March 2025. But the big changes — the ground rent cap, 990-year extensions, the ban on new leasehold flats — are still in the draft Bill. Relying on them before they pass could leave you exposed. Always base your decisions on current law, not proposed changes.
Overlooking the Cost of Service Charges
Ground rent gets most of the attention, but service charges can be a much bigger expense. The reforms include measures to make service charges more transparent and to give leaseholders stronger rights to challenge them. If you’re buying a leasehold flat, ask for the last three years of service charge accounts. Look for large one-off charges or a sinking fund that’s been neglected.
→ Scroll right to see all columns
| Reform | Current Status | What It Means |
|---|---|---|
| Ground rent cap at £250 | Draft Bill — not yet law | Existing ground rents capped; drops to peppercorn after 40 years |
| 990-year lease extensions | Draft Bill — not yet law | Standardised term with peppercorn rent; no more negotiation |
| Abolish marriage value | Draft Bill — not yet law | Cheaper extensions for leases under 80 years |
| Ban new leasehold flats | Draft Bill — not yet law | New flats sold as commonhold instead |
| Abolish two-year ownership rule | In force since January 2025 | Can enfranchise or extend immediately after buying |
| Right to Manage improvements | In force since March 2025 | Easier to take over management from freeholder |
If you’re dealing with a specific leasehold issue, getting professional advice early can save you from costly mistakes. A property law specialist can review your lease and explain your options under both current and proposed law.
How to Navigate Leasehold Reform in Practice
The reforms are complex, but the practical steps you need to take are straightforward. Here’s what to focus on depending on your situation.
If You Already Own a Leasehold Property
Start by checking your lease for ground rent terms. If it has a doubling clause or a review that’s coming up, the proposed cap would protect you — but only once it becomes law. In the meantime, you might want to negotiate a voluntary reduction with your freeholder. Some freeholders are already offering peppercorn rents in exchange for extending the lease, because they know the reforms are coming.
If your lease is below 90 years, consider whether to extend now or wait. The abolition of marriage value would make extensions cheaper, but waiting carries risk if the Bill is delayed or amended. A lease extension calculator can give you a rough idea of the cost under current law, and a surveyor can provide a formal valuation.
If You’re Buying a Leasehold Property
Ask your solicitor to flag any ground rent review clauses and check how many years are left on the lease. Lenders have their own minimum lease requirements — typically 70 to 80 years at the time of purchase. If the lease is shorter, you may struggle to get a mortgage. The proposed 990-year extensions would solve this, but they’re not law yet.
Also ask about the service charge history. A property with a low ground rent but high service charges can still be expensive to own. The reforms include measures to improve transparency, but for now you need to do your own due diligence.
- 1Check your lease term and ground rentLook for the number of years remaining and any ground rent review clauses. If the lease is below 90 years or the ground rent doubles, these are red flags.
- 2Review service charge accountsAsk for the last three years of statements. Look for large one-off charges, a sinking fund that’s underfunded, or disputes between leaseholders and the freeholder.
- 3Decide whether to extend now or waitIf your lease is below 80 years, extending now is expensive because of marriage value. Waiting for the reforms could save money, but there’s no guarantee of when they’ll pass.
- 4Get professional adviceA solicitor or surveyor who specialises in leasehold can give you a clear picture of your options. The cost of advice is small compared to the cost of a mistake.
If You’re a Landlord or Freeholder
The reforms will reduce the income you can generate from ground rents and make it harder to block lease extensions or enfranchisement. If you own a portfolio of leasehold properties, now is the time to review your position. Some freeholders are selling their ground rent income streams before the cap takes effect. Others are negotiating voluntary lease extensions with tenants to lock in value before the rules change.
The impact of foreign investment on UK property has been a hot topic, and leasehold reform adds another layer for overseas investors to consider. If you own a leasehold flat as an investment, the changes could affect both your rental income and the resale value. It’s worth running the numbers with a financial advisor who understands the UK property market.
Frequently Asked Questions About Leasehold Reform
When will the ground rent cap take effect? ▾
Can I extend my lease to 990 years now? ▾
What is commonhold and how is it different from leasehold? ▾
Will the reforms apply to existing leasehold properties? ▾
What happens if my freeholder ignores the new rules? ▾
Do the reforms apply in Scotland or Northern Ireland? ▾
What the Leasehold Reforms Mean for Your Next Move
The draft Bill represents the biggest overhaul of leasehold law in a generation. For the 5 million leaseholders in England and Wales, it promises lower costs, more security, and a simpler system. But it’s not law yet, and the gap between what’s proposed and what’s in force is where most of the risk lies. If you’re buying, selling, or extending a leasehold property today, base your decisions on current law. Use the proposed reforms as context, not as a guarantee.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Sustainable Living in the UK: How Eco-Friendly Homes Boost Property Value.
Sources and Further Reading
Property Flipping in the UK: Still a Viable Strategy or a Risky Gamble? — Explores how lease length and ground rent affect resale value, a key consideration for anyone flipping leasehold properties.
The Future of Flexible Living: UK Co-Living Trends Explored — Looks at alternative housing models, including commonhold, and how they compare to traditional leasehold flats.
Ministry of Housing, Communities & Local Government (2026). Leasehold Toolkit. 🔗
UK Government (2026). Draft Commonhold and Leasehold Reform Bill. 🔗
CMS Law (2026). Residential Ground Rent Caps, Commonhold and More. 🔗
Anthony Gold Solicitors (2026). Government Announces Major Leasehold Reform Proposals. 🔗
