Leasehold Reforms – What Landlords Need to Know about Recent Changes

Summary of Key Changes: 

Recent reforms to leasehold property law in England and Wales are transforming how landlords and leaseholders interact. In the past two years, the government has enacted and proposed major changes to make leaseholds fairer and pave the way for alternatives like commonhold. For landlords, the key developments include:

·         Cheaper, simpler lease extensions and freehold purchases: New legislation makes it easier and less costly for leaseholders to extend leases or buy the freehold of their property. This includes abolishing “marriage value” (an extra cost on short leases) and extending lease terms to 990 years at a zero ground rent.

·         Ground rent reforms: Ground rents on new residential leases have been abolished (set to zero) under earlier reforms, and a cap of £250 per year on ground rents for existing leases is now proposed, with any remaining ground rent dropping to a peppercorn (nil value) after 40 years. This significantly limits ground rent costs for leaseholder landlords, though it will also limit income for freeholder landlords.

·         Ban on new leasehold houses and soon flats: The sale of new-build houses on a leasehold basis is now banned (with limited exceptions), and the government plans to ban leasehold for most new flats, making commonhold or share-of-freehold the default for new developments. This is a structural shift aimed at ultimately ending the traditional leasehold system for future properties.

·         Greater transparency and fairness on service charges and fees: Landlords (freeholders) must comply with stricter rules on service charges providing clear breakdowns and ending hidden commissions (such as insurance kickbacks). Leaseholders now have a right to obtain detailed service charge information, ensuring charges are justifiable.

·         Stronger rights in management and dispute resolution: Leaseholders have more power to manage or challenge their building’s management. More leaseholders can invoke the Right to Manage their building (the qualification criteria have widened). In disputes, leaseholders no longer automatically pay the landlord’s legal costs when they challenge fees or practices, making it less daunting to contest unfair charges. Crucially, the draconian threat of forfeiture (losing one’s lease for breaches) will be abolished, to be replaced by a fairer enforcement process (e.g. no outright loss of the property for minor arrears). This protects leasehold owners and means freeholder landlords must use alternative remedies to resolve breaches.

These reforms some already in force, others on the horizon significantly improve protections for leasehold property owners and will impact landlords who own or manage leasehold rentals. Below, we provide background on why these changes are happening, followed by a closer look at the changes and what implications they have for landlords, including any actions you may need to take.

Background: Why Leasehold is Changing

Leasehold tenure (common in flats and some houses) has long been criticised as outdated and occasionally unfair with issues like escalating ground rents, costly lease extensions, and opaque fees. In response, the UK government committed to reforming the “feudal” leasehold system to improve consumer fairness. A series of steps have been taken:

·         Leasehold Reform (Ground Rent) Act 2022: This earlier reform put an end to ground rents for most new residential leases in England and Wales, ensuring new leasehold properties (granted after June 2022) cannot charge annual ground rent beyond a token £0 (a “peppercorn”). This was the first move to prevent exploitative rents on new leases.

·         Leasehold and Freehold Reform Act 2024: This major Act, which became law in May 2024, introduced sweeping changes to strengthen leaseholders’ rights. It was a response to Law Commission recommendations and years of pressure to make leasehold fairer. Key provisions of the 2024 Act include the lease extension, enfranchisement, service charge, and dispute resolution reforms summarized above. While the Act is law, many provisions require secondary legislation and consultations to take effect. Implementation is underway, with some measures already active (for example, since early 2025 leaseholders no longer need to wait 2 years after purchase to extend a lease or buy their freehold, and new rules making Right to Manage more accessible took effect in March 2025).

·         Draft Commonhold and Leasehold Reform Bill (2026): Building on the 2024 Act, the government has published a draft Bill in January 2026 outlining the next phase of reform. Its aim is to “bring the feudal leasehold system to an end” and “reinvigorate commonhold” (a form of ownership where flat owners own their block collectively, with no separate freeholder). The draft Bill confirms plans to ban new leasehold flats, cap existing ground rents, and abolish forfeiture, among other changes. This draft will be reviewed and refined before becoming law, but it signals the direction of travel and has been a major news topic in the property sector.

In summary, leasehold reform has been high on the news agenda, driven by cross-party recognition that landlords and leaseholders needed a fairer deal. For landlords in the East of England (and across England and Wales), it’s important to understand these changes, as they affect both your rights and obligations in leasehold arrangements. Below we break down the key changes and what they mean for you as a landlord.

Key Changes and Their Implications for Landlords

The table below summarizes the core leasehold changes and implications for landlords:

Change (Law/Proposal)	Implications for Landlords (Action Points)
Cheaper, longer lease extensions (990-year extensions at zero ground rent; marriage value abolished)[24]. In force via 2024 Act, pending full implementation.	Leaseholder-landlords (buy-to-let owners): Extending the lease on your flat will cost significantly less once the new valuation rules kick in (no “marriage value” premium), and you can secure a near-perpetual 990-year term with no ground rent[25]. This reduces long-term costs and uncertainty.  Freeholder-landlords: Be prepared for more leaseholders seeking extensions or freehold purchase at lower premiums. You’ll no longer receive inflated payouts for short leases, so adjust any financial expectations from enfranchisement.
Ground rent reforms – New leases: ground rent banned (peppercorn only). Existing leases: cap of £250/year, dropping to £0 after 40 years (proposed).	Landlords granting new leases: You cannot charge ground rent on any new long residential lease ensure any new tenancy agreements on long leases comply with the zero-ground-rent rule (this mostly affects freehold landlords/developers granting leases).  Freehold landlords (existing leases): Expect ground rent income to be capped by law at £250 per annum in a few years. Rents above that will need to be reduced, and eventually ground rent clauses may effectively expire. Consider how this will impact your revenue, especially if you’ve invested in ground rent streams.  Leaseholder landlords: If you pay ground rent on a flat you own, anticipate savings once caps apply any onerous ground rent obligations you have should ease, improving the profitability of your rental.
Ban on new leasehold houses (already in effect) and proposed ban on new leasehold flats. Future flats to use commonhold or share-of-freehold models.	Developers / Landlords in development: You can no longer sell newly built houses as leasehold (they must be freehold), and looking ahead, you won’t be able to create leasehold flats in most cases. This means planning for commonhold structures in new flat developments.  Buy-to-let investors (new builds): Be aware that new flats coming to market may be commonhold. Commonhold gives flat owners (including landlord-investors) direct ownership stakes and shared management responsibilities. This could offer more control but also requires engagement in the building’s management company.  No immediate action is needed for existing leases these bans affect future property development and sales. However, this signals that leasehold tenure is being phased out for new properties, which may influence your investment strategy (e.g. considering freehold or commonhold options).
Service charge transparency & fairer fees (2024 Act): Landlords must provide clear service charge accounts; hidden commissions (e.g. insurance) to be curtailed; leaseholders gain right to information on charges.	Freeholder-landlords / Managing agents: Ensure service charge demands are transparent and justifiable. Be prepared to disclose breakdowns of costs and any commissions or extras. Excessive or opaque charges are under scrutiny for example, building insurance commissions taken by freeholders or agents are set to be banned as “opaque and excessive” practices. It’s wise to review your service charge budget practices and eliminate any unjustified mark-ups.  Leaseholder landlords: You will benefit from these rules expect more clarity on what you’re paying for in service charges. This helps in budgeting for your rental business. You also have new rights to request and obtain detailed information about service charges and building management, which you can use to ensure you’re getting value for money or to challenge any unjustified fees.
Stronger leaseholder rights in disputes Right to Manage (RTM) easier; leaseholders no longer automatically pay freeholder’s legal costs in tribunal; forfeiture abolished (to be replaced by a fairer enforcement process).	Leaseholder-landlords: It’s now easier to band together with other leaseholders to take over management of your building (RTM) – e.g. the bar on mixed-use buildings has been relaxed, so more buildings qualify[36]. If you’re unhappy with how a freeholder or agent manages your block, consider using RTM. Also, you can challenge unreasonable charges or poor management without fear of automatically footing the landlord’s legal bill if it goes to tribunal. This lowers the risk of contesting issues like service charges.  Freeholder-landlords: Be aware that leaseholders in your building have bolstered rights to take control or to dispute charges. You can’t rely on recovering your legal costs through the lease by default if a leaseholder challenges you in court/tribunal those clauses are effectively neutered by the reform. Also, the ultimate penalty of forfeiture is being removed you will no longer be able to seize a leasehold property outright for breaches like arrears. Instead, a more proportionate system (likely involving enforced sale or debt recovery through courts) will come in. This means you should approach disputes and arrears with the understanding that solutions will involve negotiation or court orders, not forfeiture leverage. Ensure your compliance processes (for example, chasing late service charge payments) adapt to the new enforcement mechanism once it’s introduced.

(Sources for the above: House of Commons Library briefing; GOV.UK policy papers; and relevant legislation.)

What Should Landlords Do Now?

Stay informed and compliant. Most of these changes either are now law or soon will be. Landlords should review any leasehold properties in their portfolio and note where these reforms will have an impact:

·         Audit your leases: If you own the freehold on residential units or have leasehold investments, check the terms (ground rent amounts, service charge arrangements, etc.). Identify leases with high ground rents or short remaining terms these are areas where reform will bite. For instance, if you were counting on increasing ground rent income or a big premium from a lease extension, adjust those expectations in light of the caps and new valuation rules.

·         Adapt practices on fees and management: If you manage buildings or serve as a landlord freeholder, start implementing transparent accounting for service charges. Avoid any undisclosed fees or commissions that could now be deemed unfair. It’s not only legally prudent but will also foster better relations with your leaseholder tenants. Make sure to respond promptly to any requests from leaseholders for information about service charges, as the law now gives them the right to these details.

·         Consider Right to Manage (RTM) or enfranchisement: If you are a leaseholder landlord unhappy with the current management of your building, the easier RTM rules mean you can more readily team up with other leaseholders to take over management. Alternatively, the reforms make buying the freehold (enfranchisement) or extending the lease cheaper potentially a worthwhile move to protect your investment in the long run. The decision on timing (whether to wait for all provisions to kick in or act now) can be complex; resources like the Leasehold Advisory Service can help weigh the options in light of ongoing changes.

·         Stay engaged with upcoming changes: The Draft 2026 Bill is not law yet, but it indicates where things are headed (e.g. commonhold and the final phase-out of new leaseholds). If you’re a developer or planning to acquire new-build flats, you may want to prepare for a commonhold regime which could mean learning new management structures. For most everyday landlords, simply keeping an eye on when the ground rent cap and forfeiture changes are enacted will be important. The Eastern Landlords Association (ELA) will continue to update members as these proposals advance, so consider responding to any ELA calls for input or government consultations that might affect you as a stakeholder.

Conclusion

Leasehold property law is undergoing its biggest transformation in decades, with the clear direction of travel being a fairer deal for leaseholders and a move away from leasehold tenure for future properties. For landlords in the East of England, these changes bring both challenges and opportunities: some traditional income streams (like ground rent) will diminish, but a fairer system can also mean more sustainable investments and better landlord-tenant relationships in the long run. By understanding the reforms and planning accordingly, landlords can ensure they remain compliant and make the most of the new landscape. The Eastern Landlords Association will continue to provide guidance as further details emerge. Stay informed, and you’ll stay ahead of the changes.