If you've seen headlines about leasehold reform this year, you might be wondering what it actually means for you right now. The short version: some big changes are on the way, but they're not law yet, and one rule that used to apply has already been scrapped. Here's what's actually changed, what hasn't, and why extending sooner rather than later could work in your favour.
Most flats in England and Wales are sold as leasehold, so if you own a flat you probably have a lease: a contractual agreement between the leaseholder and the landlord or freeholder. The lease gives you conditional ownership of a property for a set period of time.
The lease will also set out the leaseholder's covenants, conditions and obligations (formal promises to do or not do something), such as paying ground rent and maintenance costs, and what the landlord is responsible for, such as maintenance and insurance.
The amount of time a lease is granted for is known as the "term," and it's a diminishing asset: it loses value as the length of the term decreases.
A statutory lease extension allows a leaseholder to add 90 years onto the term remaining on their lease. If your current lease has 80 years left on it, the extended lease would run for 170 years.
As the years left on the lease decrease, so does the value of the property. The amount you'll need to pay the freeholder to extend the term is also likely to increase the longer you wait.
When buying a leasehold property, a prospective buyer should check the number of years left on the lease. Anything under 80 years is considered undesirable, since the lease would need extending at a cost. It can also be harder to get a mortgage on the property, as some lenders won't lend against a short lease. A lease extension may be needed simply to sell the property.
There are two routes you can take to extend your lease.
This is an informal process where a leaseholder approaches the freeholder directly to negotiate an extension. It can work well if you have a good relationship with your landlord or freeholder, since an informal agreement can be cheaper and faster in the short term and avoids immediate legal costs. You may also be able to agree more flexible lease terms.
If you're considering this route, bear in mind that a landlord or freeholder may overcharge you, agree only to a short extension, or increase your ground rent. Any of these could affect you financially and make the property harder to sell later.
If you can't agree an informal extension, you have the option of a formal statutory lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 (as amended).
As the leaseholder, you qualify for a statutory lease extension as soon as you're registered as the owner, provided your lease was originally granted for more than 21 years. Since 31 January 2025, you no longer need to have owned the flat for two years before applying; that rule has been abolished. Once you qualify, you can add 90 years to the term of your lease and pay no further ground rent.
The amount you need to pay to extend your lease is calculated by a surveyor using a formula set out in the Act, and this figure is included in the Section 42 notice you serve on the landlord or freeholder.
The shorter the lease, the more expensive it is to extend. It's best to act before the term falls below 80 years, since the cost increases further once you're also liable for a "marriage value" payment to the landlord.
Ideally, you should instruct a specialist conveyancer to serve the Section 42 notice on the landlord or freeholder, who then has two months to respond. Their counter-notice will confirm whether they accept the extension and agree the price.
If the landlord or freeholder accepts your right to extend but disagrees on price, either side can apply to the First Tier Tribunal (Property Chamber). If the matter still hasn't been settled six months after the counter-notice, you'll need to withdraw the extension notice and wait a year before applying again.
As the leaseholder, you're liable for the landlord's or freeholder's reasonable legal and surveying costs incurred in granting the extension.
The statutory process might take four months to a year to complete and can be more costly upfront, but you have more scope to negotiate the price. The ground rent payable also reduces to a "peppercorn," essentially zero, for the rest of the term.
Many leaseholders still don't realise they can start this process the moment they own their flat, but it's a financially worthwhile option to have.
The informal route can look appealing since it seems to save on valuation and legal costs, but it can prove a false economy in the long run.
The benefits of keeping the process formal, through a statutory lease extension, include:
You're eligible for a statutory lease extension if your lease was originally granted for more than 21 years. There's no minimum ownership period to meet; you can apply as soon as you're the registered owner.
If a seller has already served a Section 42 notice before selling, the benefit of that notice needs to be formally assigned to you as the buyer for the process to continue on the terms already agreed, rather than restarting it yourself after completion.
If you've read about leasehold reform, you might be wondering whether it's worth waiting for better terms rather than extending now. Here's where things actually stand.
What's law today:
What's coming, but not yet in force:
The government still needs to set the valuation rates that make the new system work, and that consultation doesn't close until 23 September 2026. Freeholders have also challenged the reforms in court and lost at first instance, but the case has gone to appeal, so there's no confirmed date for when, or exactly how, the new rules will apply. Legal commentators are currently estimating 2027 to 2028 before marriage value abolition takes effect, though nothing is guaranteed.
What this means in practice:
There's no single right answer here. It depends on your lease length, your timeline, and how comfortable you are holding out for rules that aren't confirmed yet. Speaking to a conveyancer about your specific lease is the fastest way to find out where you stand.
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If you serve a Section 42 notice and then decide to sell, make sure the benefit of the notice is formally assigned to the buyer before completion. Without that assignment, the buyer can't pick up your existing notice and agreed price; they'd need to start the process again from scratch, at their own cost.
The landlord or freeholder may ask you to provide evidence of your title to the property. You must provide this within 21 days of the request.
You may need to pay a deposit. The landlord or freeholder can request 10% of the premium proposed in your notice, payable within 14 days of the request.
The landlord's or freeholder's lawyer will usually draft the lease extension deed, and your conveyancer will review, negotiate, and approve the terms. Strict time limits apply throughout the process, so it's worth having a specialist conveyancer advising you from the start.