Leasehold Reform: Extending Your Lease and Why Timing Matters

If you’re a leaseholder, you’ve probably heard about the forthcoming reforms to leasehold law. The promise of easier, cheaper lease extensions, lower ground rents, and better rights—and they are welcome. But waiting for those reforms to settle? It may come with a price.

What’s Changing

The Leasehold and Freehold Reform Act 2024 has become law. However, many of its most important changes are not yet in force.

Among the reforms are:

• Abolishing marriage value for leases under 80 years
• Potential new caps on ground rent in premium calculations
• Standard lease extension terms up to 990 years
• Removing the old requirement that you must have owned a leasehold flat for two years before extending it.

Why Waiting Could Prove Costly

Whilst the reforms look promising, there are several reasons delaying might cost more than acting now.

Shorter lease lengths can erode the value of your home. 

Each year, the unexpired term on your lease reduces. As that term drops—especially under about 80 years—the cost to extend tends to rise sharply.

“Marriage value” kicks in.

If a lease has less than 80 years left, under current law you have to pay something called marriage value—basically a share of the increase in value realised by extending the lease. If you wait until you’re under that threshold, you could incur that extra cost.

Delays in reform implementation.

Even though the 2024 Act is law, many key pieces—such as how premiums are calculated or what ground rent caps will apply—are still awaiting secondary legislation, consultation and sometimes court challenges. That means the improvements may take several years to fully kick in.

Market & mortgage risks.

Leases with shorter terms are less attractive to lenders and buyers. They can make selling harder, or raise mortgage interest costs. The value of your apartment, flat or maisonette could be affected.

The reform may not be what you expect.

Because some reform details are still being worked out—values, rates, caps—there’s no guarantee everything will be exactly as hoped. Some leaseholders whose leases are well above 80 years, or with low ground rent, may find less advantage under the new system than others.

When to Take Action

You might want to strongly consider extending your lease now, especially if there’s less than about 80 years remaining on your lease, you plan to sell or remortgage in the near future, or if your ground rent is relatively high or rising.

If your lease has plenty of time left (say well over 80 years), ground rent is low, and you’re not planning to move or remortgage soon, you might decide to wait and see how reform plays out. Just be sure you’re comfortable with the risks.

Still unsure? Seek Advice.

Leaseholders looking to extend their lease face a tension: reform promises relief, but delays and costs in the interim could eat into those benefits. Waiting might seem appealing—but every year that passes with a shorter lease can mean added expense down the line, and perhaps fewer choices.

If you are a leaseholder, it’s worth seeking advice now. Understanding where your lease term, ground rent, and plans sit in the mix can help you decide whether acting now, rather than waiting, is the more prudent route.

If you’d like us to, we can refer you to trusted independent advisors for financial advice.  Feel free to contact your local branch for a referral.

Source: Lease Extension – The Leasehold Advisory Service

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