Leasehold Reform 2024: What Changed for Mortgage Applicants

The Leasehold and Freehold Reform Act 2024 represents the most significant shake-up of leasehold law in a generation. For mortgage applicants, some of these changes are genuinely transformative — but the implementation has been phased, and not everything is in force yet. Here is what you need to know.

What the Act Contains

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. Its key provisions include:

Ban on New Leasehold Houses

New houses can no longer be sold as leasehold (with limited exceptions). This does not affect existing leasehold houses, but it prevents the creation of new ones. This provision is in force.

Ground Rent Cap on New Leases

New residential leases must have ground rent capped at a peppercorn (effectively zero). This builds on the Leasehold Reform (Ground Rent) Act 2022, which already capped ground rent on new leases. Existing leaseholders benefit when they extend their lease — the extended lease will have zero ground rent.

Abolition of Marriage Value

This is the most impactful change for short-lease mortgage applicants. Marriage value is the 50% share of the increased property value that freeholders can claim when a lease is extended below 80 years. Abolishing it would dramatically reduce the cost of extending short leases.

Status: This provision is in the Act but requires secondary legislation (commencement orders) to take effect. As of early 2026, implementation is ongoing. Check the government's leasehold reform webpage for the latest position.

Standard 990-Year Extensions

When fully implemented, the standard lease extension will be 990 years (up from 90 for flats and 50 for houses). This means one extension should last effectively forever.

Removal of 2-Year Ownership Requirement

Currently, you must own a leasehold property for 2 years before you can exercise your statutory right to extend. The Act provides for this requirement to be removed, allowing you to start the extension process from day one of ownership.

Right to Manage Improvements

Changes to make it easier for leaseholders to take over management of their building through the Right to Manage process.

What This Means for Mortgage Applicants

Short Lease Properties

Once marriage value is abolished, the cost of extending a short lease will drop significantly. This could make short-lease properties (currently priced lower to reflect extension costs) much more attractive. However, until the abolition is in force, lenders continue to apply their existing lease length criteria.

Ground Rent Concerns

High or escalating ground rent has been a significant mortgage issue. Some leases include ground rent that doubles every 10-25 years, potentially reaching thousands of pounds per year. The 2022 Act addressed new leases; the 2024 Act extends protections. Some lenders have refused to lend on properties with onerous ground rent clauses — this should become less of an issue over time.

New-Build Leasehold Houses

The ban on new leasehold houses removes a controversial practice. Buyers of new houses no longer need to worry about discovering they are buying a leasehold property with ground rent obligations. For existing leasehold house owners, the Act makes it easier and cheaper to extend the lease or buy the freehold.

How Lenders Are Responding

Lender policies are evolving in response to the reforms, but slowly:

Current Position

• Most lenders still apply their existing minimum lease length requirements (typically 70-85 years at end of term)
• Lenders are aware of the reforms but are waiting for full implementation before changing criteria
• Some lenders have already relaxed their ground rent policies in anticipation of the reforms
• Individual lender criteria should be checked at the time of your application

Expected Future Position

• Once marriage value is abolished, lenders may become more willing to lend on shorter leases, knowing that extensions will be more affordable
• The removal of the 2-year ownership requirement may allow lenders to condition mortgages on immediate lease extension
• 990-year standard extensions should eliminate long-term lease length concerns

Practical Implications for Buyers

Buying a Short-Lease Property Now

If you are considering a short-lease property now, you face a dilemma. Prices may already be discounted to reflect the current cost of extension. If marriage value is abolished soon, the extension will be cheaper than expected — making the discounted price a genuine bargain.

On the other hand, if implementation is delayed further, you are stuck with the current (expensive) extension process. The safe approach is to budget for the extension based on current law and treat any reduction as a bonus.

Buying a Property with Problematic Ground Rent

If a property has a high or escalating ground rent that is currently causing lender resistance, extending the lease will reset the ground rent to zero. This solves the lending problem but requires the extension process to be completed.

First-Time Buyers and Leasehold

If you are a first-time buyer looking at flats (which are overwhelmingly leasehold) — whether a high-rise flat or a flat above a shop — the reforms are broadly positive for you. New leases will have zero ground rent, extensions will be longer and cheaper, and the overall leasehold system is becoming more transparent and fair.

What to Do Now

1. Check the current implementation status — which provisions of the Act are actually in force today?
2. Do not assume future changes — base your financial decisions on current law
3. If you own a short lease, consider extending now if the provisions that reduce costs are not yet in force — waiting costs you as the lease shortens
4. If you are buying a short lease, factor in extension costs based on current law and negotiate the price accordingly
5. Talk to a specialist leasehold solicitor who is up to date with the reform implementation — or use a specialist mortgage broker who understands the changing landscape
6. Check your ground rent terms — understand what you are committing to and whether extending the lease would resolve any issues

Specific Lender Responses to the Reforms

Different lenders have responded to the 2024 Act at different speeds. Here is how the major players are currently positioned:

Halifax and Lloyds Banking Group

Halifax has gradually loosened its approach to ground rent. They previously declined properties with ground rent exceeding 0.1% of the property value or where ground rent doubled more frequently than every 20 years. They are now more flexible on existing leases, particularly where the borrower plans to extend the lease (resetting ground rent to zero). Their minimum lease length remains 70 years at end of term.

Nationwide

Nationwide has been relatively progressive. They updated their ground rent policies ahead of some competitors and have signalled willingness to adjust lease length requirements once marriage value abolition is fully implemented. Currently, they still require a minimum lease length of 55 years at application, with 30 years remaining at the end of the mortgage term.

NatWest

NatWest has taken a cautious but evolving approach. They continue to apply standard lease length requirements but have softened their position on properties where a lease extension is underway or contractually committed. They are actively monitoring the implementation timeline.

Barclays

Barclays requires a minimum unexpired lease of 70 years at the end of the mortgage term. They have not yet relaxed this in response to the reforms but are expected to review once marriage value abolition is fully in force.

Specialist Lenders

Some specialist lenders, including Kensington and Accord, have been quicker to adopt flexible approaches to leasehold properties affected by the reform agenda. They may accept shorter leases or more complex ground rent structures, though often with a premium on the interest rate.

Valuation Implications of the Reforms

The reforms have direct implications for how leasehold properties are valued:

Marriage Value and Pricing

Currently, properties with leases under 80 years are valued with the cost of marriage value factored in. Once marriage value is abolished, the cost of extending a short lease will drop — in some cases dramatically. This could increase the value of short-lease properties, as the gap between the purchase price plus extension cost and the full-lease value narrows.

Surveyor Guidance

RICS (the Royal Institution of Chartered Surveyors) has issued guidance to valuers on how to account for the reforms in their valuations. During the transition period, valuers are advised to value based on current law while noting the potential impact of incoming changes. This means that the full benefit of the reforms may not yet be reflected in property valuations.

Ground Rent Capitalisation

Valuers assess the impact of ground rent by capitalising the annual payment — essentially calculating its total cost over the remaining lease. High or escalating ground rent reduces the property's value because it represents a recurring cost burden. Once the ground rent is reset to zero through a lease extension, this deduction falls away, potentially increasing the property's value.

Insurance and Leasehold Reform

The reforms have some indirect implications for insurance:

Service Charge Transparency

The Act includes provisions to make service charges (which typically include buildings insurance premiums) more transparent. This is relevant for mortgage applicants because lenders factor service charges into affordability calculations. Greater transparency should help buyers understand what they are committing to and help lenders assess the ongoing costs more accurately.

Insurance Commissions

One controversial aspect of leasehold has been the commissions paid by insurers to freeholders for arranging buildings insurance. These commissions have sometimes inflated premiums significantly. The reforms include provisions to address this, which should eventually lead to fairer insurance costs for leaseholders.

Regional Variations in Leasehold

The impact of leasehold reform varies by region because the prevalence of leasehold differs across the UK:

London

London has the highest concentration of leasehold properties in the UK. The city's flat-dominated housing stock means that millions of Londoners are leaseholders. Short leases are particularly common in older mansion blocks and purpose-built flats from the mid-20th century. The financial impact of the reforms — particularly marriage value abolition — is greatest in London because property values are highest.

The North West

Manchester, Liverpool, and surrounding areas have a significant number of leasehold houses, many of which were sold as new-builds with ground rent in the 2000s and 2010s. The leasehold house scandal — where buyers discovered they had onerous ground rent clauses — was concentrated in this region. The ban on new leasehold houses directly addresses this problem.

The Midlands

Birmingham and the Midlands have a mix of leasehold flats and some leasehold houses, particularly on new-build estates. The region has seen some of the most problematic ground rent practices, and the reforms are particularly welcome here.

Scotland

Scotland effectively does not have residential leasehold in the same sense as England and Wales. The Long Leases (Scotland) Act 2012 converted most long leases to outright ownership. The 2024 reforms are therefore primarily relevant to England and Wales.

Wales

Wales follows English leasehold law, and the reforms apply equally. However, the Welsh Government has expressed interest in additional measures to protect leaseholders beyond the UK-wide reforms.

Edge Cases and Transitional Issues

Properties Bought During the Transition

If you buy a leasehold property now, before all reforms are implemented, you may benefit from future changes — but you cannot guarantee when those changes will take effect. The practical advice is to negotiate based on current law (including current extension costs) and treat any future benefits as a bonus.

Collective Enfranchisement

The Act also makes changes to collective enfranchisement — where leaseholders collectively buy the freehold of their building. The reforms aim to reduce the cost and complexity of this process. If you are buying in a block where collective enfranchisement is being considered, this could significantly improve your position as a leaseholder.

Retirement Properties

Some retirement properties are sold on long leases with particularly complex service charge and transfer fee arrangements. The reforms address some of these issues, but retirement leasehold remains an area of ongoing concern. If you are buying a retirement leasehold property, take specialist legal advice.

Ground Rent Review Clauses

Some leases include ground rent that increases in line with the Retail Price Index (RPI), a fixed percentage, or even doubles at set intervals. The most problematic are "doubling" clauses that can result in ground rent of thousands of pounds per year within a few decades. While the reforms will eventually address new leases, existing leases with problematic review clauses remain in force until the leaseholder extends. Some lenders still refuse to lend on properties with doubling ground rent clauses, even with the reforms on the horizon.

Survey and Conveyancing Requirements

When buying a leasehold property, the conveyancing process is more involved than for a freehold:

• Lease review: Your solicitor must thoroughly review the lease terms, including ground rent, service charge provisions, alteration restrictions, and assignment conditions
• Management pack: The managing agent provides a pack of information about the building, including service charge accounts, insurance details, and planned works
• Ground rent calculations: Your solicitor should calculate the ground rent over the remaining term and identify any review mechanisms
• Lease extension enquiries: If the lease is short, your solicitor should obtain an estimate of extension costs from a specialist leasehold surveyor (£500-1,500)
• Enquiries of the freeholder: Standard pre-contract enquiries about the building and its management

The cost of leasehold conveyancing is typically £200-500 more than freehold conveyancing, reflecting the additional work involved.

The Bigger Picture

The 2024 Act is part of a long-term shift towards making leasehold fairer for homeowners. Combined with previous reforms and planned future changes (including potential commonhold reform and the ongoing leasehold scandal), the direction of travel is clear: less power for freeholders, lower costs for leaseholders, and a more transparent system overall.

For mortgage applicants, this is positive. But the transition period — where legislation exists but is not fully implemented — requires careful navigation. Stay informed, take professional advice, and do not assume that future changes are already in effect.

This is educational content, not financial advice. Your situation is unique — speak to a qualified mortgage broker before making any decisions.