The 5 Landmark Pillars of the 2026 Leasehold Overhaul
The Leasehold and Freehold Reform Act received Royal Assent in late May 2024, with its core valuation mechanics enacted through secondary legislation in 2025/2026:
1. 990-Year Statutory Extensions: Flat owners no longer extend by 90 years. Every statutory extension now grants a massive 990-year lease with ground rent permanently fixed at a financial peppercorn (£0.00).
2. Abolition of Marriage Value: Under the historic 1993 Act, leases under 80 years were heavily penalized with marriage value. Under the 2026 regime, marriage value is eliminated from the statutory valuation formula entirely.
3. Scrapping the 2-Year Ownership Rule: Previously, homebuyers had to wait two continuous years before exercising statutory extension rights, or arrange a cumbersome Deed of Assignment from the seller. Flat owners can now serve a formal extension notice from day one of completion.
4. Freeholders Pay Own Costs: Historically, leaseholders were forced to pay the freeholder's solicitors and surveyors. Section 19 of the new Act makes both parties responsible for their own professional costs, saving leaseholders £2,000 to £4,000 per transaction.
5. Complete Ban on Leasehold Houses: All newly constructed houses in England and Wales must now be sold as pure freehold, outlawing fleecehold estate ground rents.
| Feature / Rule | Historic 1993 Act Regime | 2026 Enacted Reform Regime |
|---|---|---|
| Extension Term Added | +90 Years (e.g. 75 yrs becomes 165 yrs) | +990 Years (Effectively virtual freehold) |
| Ground Rent | Reduced to peppercorn (£0.00) | Guaranteed peppercorn (£0.00) |
| Marriage Value (Sub-80 Yrs) | 50% split paid to freeholder (Very costly) | 100% ABOLISHED (Zero marriage value) |
| Qualifying Ownership Period | Must own flat for 2 continuous years | Zero days (Eligible on Day 1 of completion) |
| Freeholder's Legal Costs | Leaseholder pays freeholder's legal bills | Each party pays their own legal costs |