Leasehold reform: what has changed and what is coming

At a glance

Change	Status
Leaseholders no longer need to have owned their flat for two years before extending the lease or buying the freehold	In force since 31 January 2025
Right to Manage: buildings with up to 50% commercial space qualify, and RTM companies generally no longer pay the freeholder’s costs	In force since 3 March 2025
Freeholders can no longer recover their Right to Manage costs through the service charge	In force since 3 March 2025
Standard service charge demands, annual reports and accounts, and a right to more information	Expected from 2027
Limits on freeholders recovering legal costs from leaseholders	Expected from 2027
Ending hidden commissions on buildings insurance	Confirmed, no date yet
990-year lease extensions and the end of marriage value	Enacted, not yet in force
Cap on existing ground rents and commonhold for new flats	Proposed in a draft bill

Already in force

Lease extensions and buying the freehold. Since 31 January 2025, leaseholders no longer have to wait two years after buying a flat before using their statutory rights to extend the lease or join a collective freehold purchase.

Right to Manage. Since 3 March 2025, buildings with up to 50% non-residential floor space can qualify (previously 25%), RTM companies are generally no longer liable for the freeholder’s costs of a claim, and freeholders cannot pass those costs on through the service charge. Our Right to Manage guide explains the process.

Expected from 2027

Service charge transparency. In July 2026 the government confirmed that service charge demands will follow a standard form, with the budget sent alongside, and that leaseholders will receive a standard annual report and accounts, with a right to request information going back six years. Regulations are due to be made later this year, with the changes taking effect from 2027. Landlords and agents are to get 12 months’ notice of the new forms.

Legal costs. Freeholders will no longer be able to recover their legal costs from leaseholders through the service charge or administration charges without the approval of a court or tribunal, and leaseholders will be able to apply to recover their own costs. This will apply to proceedings started after the change comes into force.

Buildings insurance. The government has confirmed that it will end hidden commissions, replacing them with transparent, permitted fees, together with clearer information about policies. No date has been set.

Enacted but not yet in force

Lease extensions and valuation. The Act provides for 990-year lease extensions, the abolition of marriage value and a standard valuation method. None of this is in force yet. Until it is, the current rules still apply: a statutory lease extension adds 90 years, and marriage value is payable when a lease has less than 80 years left. The government is consulting on the rates used in the new valuations until 21 October 2026.

Freeholders challenged the valuation changes in court. The High Court dismissed the challenge in October 2025, and in April 2026 the Court of Appeal gave permission to appeal. If your lease is getting short, take independent advice before deciding whether to extend now or wait.

Proposed

The draft Commonhold and Leasehold Reform Bill, published in January 2026, proposes capping ground rents on existing leases at £250 a year, falling to a peppercorn after 40 years; making commonhold the default for new flats; and abolishing forfeiture. These are proposals, not law, and may change before the Bill passes.

What this means for directors

For RTM and resident management company directors, the biggest practical change is the move to standard service charge demands, annual reports and accounts from 2027. Buildings with organised records, clear budgets and up-to-date accounts will find the change straightforward. We will adopt the new formats for every building we manage as soon as they are confirmed.

This article is general information, not legal advice. Last checked 15 October 2026.