Ground Rent Reform — What the Leasehold and Freehold Reform Act 2024 Means for Leaseholders

Background: Why Reform Was Needed

For decades, leaseholders in England and Wales faced a system widely criticised as unfair. Ground rents — annual charges paid to freeholders with no service in return — were often written to double every 10 or 25 years, creating serious mortgage and saleability problems. Service charges lacked transparency. Lease extensions were expensive and complex. The Leasehold and Freehold Reform Act 2024 represents the most significant legislative response to these issues in a generation.

What the 2022 Leasehold Reform (Ground Rent) Act Already Did

Before the 2024 Act, the Leasehold Reform (Ground Rent) Act 2022 capped ground rent at a peppercorn (effectively zero) for all **new** regulated leases granted on or after 30 June 2022. Existing leases were unaffected. This ended the creation of new ground rent income streams but did nothing for the millions of leaseholders already locked into old leases.

What the Leasehold and Freehold Reform Act 2024 Changed

**Lease extensions made cheaper and easier:**

• The two-year ownership requirement for the statutory right to extend a lease is abolished. Leaseholders can now claim from day one of ownership (once the relevant provisions are commenced).
• The ‘marriage value’ payable when extending a lease with under 80 years remaining is abolished for flats (and was never payable for houses). This significantly reduces premiums on shorter leases.
• Standard lease extension terms are improved: leaseholders extending under the statutory route will be entitled to a 990-year extension (up from 90 years added to the current term).

**Collective enfranchisement made easier:**

• The non-residential limit for collective enfranchisement is increased from 25% to 50%, meaning more mixed-use buildings will qualify.
• Price calculations are reformed to remove marriage value and apply a new valuation methodology.

**Service charge transparency:**

• Freeholders and managing agents must provide service charge accounts in a prescribed form with supporting documentation.
• Leaseholders gain a right to request information about service charges and administration charges in a standardised format.
• The Act restricts what costs freeholders can recover through service charges for litigation against leaseholders.

**Buildings insurance:**

• Freeholders must not profit from buildings insurance arrangements. Commissions and other benefits received must be disclosed and, in some cases, passed on to leaseholders.

**Forfeiture reform:**

• The Act restricts the use of forfeiture (the freeholder’s right to repossess a flat for breach of lease) for relatively minor arrears, pending further reform.

What Is Still Not Yet in Force

The 2024 Act received Royal Assent in May 2024 but many of its provisions require secondary legislation (commencement orders) before they take effect. As of early 2026, several key provisions — including the marriage value abolition and the new lease extension terms — are not yet in force. Leaseholders should monitor Government announcements and take professional advice before assuming the new rules apply to their situation.

What the Act Does NOT Do

The Act stops short of mandating the replacement of leasehold with commonhold tenure for new developments. Despite recommendations from the Law Commission in 2020, commonhold remains optional rather than compulsory. This is seen as the biggest missed opportunity of the reform programme.

The Act also does not cap existing ground rents on old leases. Leaseholders on onerous ground rent terms remain in difficulty unless they can negotiate a variation or extend their lease to convert to a peppercorn.

What Leaseholders Should Do Now

1. **Check your current lease.** Note the ground rent terms, the remaining lease length, and any rent review provisions.

2. **Review your service charge history.** If you have not received compliant accounts, request them under the existing LTA 1985 rights (which remain in force).

3. **Consider extending your lease now.** If your lease is below 90 years, do not wait for reform provisions to be commenced. The current statutory regime already gives you a right to extend at reasonable cost.

4. **Take professional advice** on how the 2024 Act affects your specific situation once the relevant provisions are in force.

Property Passport UK tracks lease data, ground rent terms, and service charge records to help leaseholders understand their position and act at the right time.