Published: July 2026 | Fact-Checked & Audited By: David Vance, CTA FCA (Chartered Tax Advisor & Accountant)
This guide is fully updated for the 2026/27 UK tax year. All lease extension calculations and valuation rules have been audited against official Leasehold Reform guidelines.
The landscape of lease extension in the UK has undergone its most dramatic transformation in decades. The passage of the Leasehold and Freehold Reform Act 2024 (with key provisions rolling out through 2026) has fundamentally altered the rights of leaseholders, making it cheaper, simpler, and faster to extend a lease. In this comprehensive guide, we break down the new rules, explain the abolition of “marriage value”, and highlight how the standard statutory lease extension term has increased.
Key Changes Under the Leasehold Reform Act
The new legislative framework introduces five primary changes designed to protect leaseholders from high freeholder fees:
- Extension Term Increased to 990 Years: Historically, statutory lease extensions added 90 years to a flat and 50 years to a house. Under the new rules, both flat and house leaseholders have a legal right to extend their lease by a standard term of 990 years.
- Abolition of Marriage Value: Previously, if a lease fell below 80 years, leaseholders had to pay “marriage value”—which represented 50% of the increase in the property’s value created by the extension. This rule doubled the cost for shorter leases. The new Act abolishes marriage value entirely from the statutory formula.
- Ground Rent Reduced to Peppercorn: Upon extending your lease, your ground rent is immediately reduced to a “peppercorn” (effectively £0 per year) for the remainder of the 990-year term.
- Abolition of the 2-Year Ownership Rule: Leaseholders no longer need to own their property for 2 years before starting the formal statutory lease extension process. You can initiate the process on Day 1 of purchasing a leasehold home.
- Capped Ground Rent in Valuation: When calculating the capitalization value of the ground rent, the ground rent is capped at 0.1% of the property’s freehold value in the statutory formula, preventing freeholders from using high ground rents to inflate the extension cost.
Why the “80-Year Rule” Still Matters During the Transition
While the abolition of marriage value is set in law, the transition period means that many lenders and buyers are still highly cautious about leases approaching the 80-year mark. If your lease is close to 80 years, extending it now protects your property’s marketability. Properties with leases under 80 years are difficult to mortgage, as standard high-street lenders refuse to lend on them.
David Vance, CTA FCA, recommends: “The Leasehold Reform Act makes extending short leases significantly cheaper. However, freeholders can still challenge the freehold value or interest rates used during valuation. Using our Lease Extension Calculator lets you model your estimated premium using both the old and new statutory formulas to see exactly how much you will save.”
Topical Cluster Links
To calculate your lease extension cost or learn about the statutory process, refer to our other guides:
- Use our Lease Extension Calculator for an instant cost estimation.
- Read our guide on How to Calculate Lease Extension Cost: Valuation Math Explained.
- Read our guide on Statutory vs Informal Lease Extensions: Section 42 Notices.
Frequently Asked Questions (FAQs)
1. When does the Leasehold Reform Act 2024 take effect?
The Act received Royal Assent in May 2024. While some provisions are active, the key valuation changes (including the abolition of marriage value) are being implemented in phases through 2026/27. Consult a qualified surveyor for active regional timelines.
2. Does the Leasehold Reform Act apply to houses and flats?
Yes. The Act applies to both residential leasehold flats and houses, giving both the right to a 990-year lease extension at a peppercorn ground rent.
3. Will extending my lease remove ground rent?
Yes. Under statutory rules, extending your lease immediately reduces the ground rent to a peppercorn (£0) for the remainder of the lease term.