UK Leasehold and Freehold Reform Act 2024: Complete Overseas Buyer Guide for 2026

Why the 2024 Reform Matters for Buyers in 2026

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024, marking the most significant overhaul of England and Wales’ residential property ownership framework in decades. According to the official government announcement, the legislation aims to make it “cheaper and easier” for millions of leaseholders to extend their leases or purchase the freehold of their homes.

For Taiwanese, Hong Kong, and overseas Chinese buyers considering a London new-build purchase in 2026 — or already holding leasehold property in the UK — understanding which provisions are already in force, and which are still pending, is essential to making sound property decisions. The reform is rolling out in stages, and confusing what has passed into law with what has not yet commenced is one of the most common mistakes overseas investors make.

IREIS Properties has compiled this guide based on verified official sources, mapping out exactly what has changed, what is still to come, and what each stage means practically for overseas investors.

Background: Why Leasehold Reform Was Needed

Virtually all new-build flats in England and Wales are sold as leasehold — buyers own a time-limited interest in the property, not the building itself. While a 125-year or 250-year lease seems generous at purchase, the effects of shortening residual term are material: property values soften, mortgage eligibility narrows, and resale becomes significantly harder once the lease drops below 80 years remaining.

The most criticised feature of the traditional leasehold system was “marriage value” — a cost premium that leaseholders must pay when extending a lease with fewer than 80 years remaining, which could add tens of thousands of pounds to the extension cost. This premium compensated freeholders for the uplift in property value that leaseholders gained from the extended term — a quirk that many argued had no economic justification.

Combined with opaque service charges, freeholder profits from building insurance commissions, and structural barriers to self-management, the traditional leasehold system generated persistent and well-documented controversy. The 2024 Act is the government’s most comprehensive legislative response.

The Leasehold and Freehold Reform Act 2024 spans nine parts and addresses: lease extensions and enfranchisement valuation methodology, Right to Manage eligibility and costs, service charge transparency, building insurance commissions, estate management, and more.

What Is Already in Force in 2026

Removal of the Two-Year Qualifying Period (January 2025)

Before the reform, leaseholders were required to own their property for at least two years before they could apply to extend their lease or purchase the freehold. This waiting period created a frustrating gap for buyers who acquired properties with shorter leases and needed to extend promptly.

The 2024 Act abolished this waiting period: from January 2025, buyers can apply immediately after completion — no waiting period required. This change is particularly valuable for overseas investors who may acquire properties as investments and want to manage the lease extension process without being locked out for two years.

For buyers of second-hand leasehold properties where the lease has already shortened, the ability to apply on day one gives far greater flexibility in sequencing the purchase and extension process.

Right to Manage Reforms (March 2025)

The most substantive provisions already in effect are the Right to Manage reforms, which came into force on 3 March 2025. Right to Manage allows leaseholders to take over the management of their building from the freeholder — a right that has historically been difficult to exercise in many London new-builds due to qualifying thresholds.

Key changes now live:

• Non-residential limit raised from 25% to 50%: Leaseholders in mixed-use buildings with significant ground-floor commercial space — a very common configuration in central London, where ground-floor retail or office space often exceeds the old 25% limit — can now qualify for Right to Manage claims. This is a major expansion in eligibility.
• Freeholders can no longer recover their legal costs from leaseholders in most Right to Manage claims. Previously, a successful Right to Manage claim still came with a bill for the freeholder’s legal expenses — now abolished for most cases, potentially saving applicants thousands of pounds.
• Strengthened leaseholder voting rights in Right to Manage companies, preventing freeholders from using their own units or retained commercial interests to block claims through structural voting control.

For overseas landlords who are dissatisfied with expensive managing agents or poor building maintenance standards — a frequent complaint among London buy-to-let investors — Right to Manage is now both more accessible and more affordable than before.

Major Reforms Not Yet in Force: What You Are Waiting For

990-Year Lease Extensions and Abolition of Marriage Value

The Act was designed to give leaseholders the statutory right to extend their lease to 990 years with zero ground rent, while eliminating marriage value from the cost calculation entirely. For properties with fewer than 80 years remaining on the lease — a threshold that catches many older converted flats and smaller buildings in central London — this would cut extension costs dramatically. Independent estimates suggested total savings across all leaseholders could reach billions of pounds.

However, two specific technical flaws in the legislation have prevented these provisions from being implemented. First, a loophole emerged in the new valuation formula that could allow some applicants to pay less than the correctly calculated sum, creating legal uncertainty. Second, an unintended drafting error excluded shared ownership leaseholders from being able to extend their lease with their immediate landlord under the new rules.

The government has publicly acknowledged both issues. Rather than attempting to fix them through secondary legislation, the government has announced that the fixes will be incorporated into the forthcoming Commonhold and Leasehold Reform Bill, expected to be introduced in the 2026–27 parliamentary session.

The practical implication: 990-year extensions and the abolition of marriage value are not yet in force. Leaseholders seeking formal lease extensions today must still use the existing statutory framework, which includes marriage value for sub-80-year leases. This means the costs of extending a short lease remain high until the next Bill passes and is commenced.

Service Charge Transparency and Building Insurance Commission Ban

Two further provisions that were widely anticipated remain unimplemented. The first requires landlords and managing agents to provide leaseholders with standardised service charge documentation — clear, itemised breakdowns of how the service charge fund is spent, with enhanced rights to challenge charges considered unreasonable. The second bans freeholders and managing agents from receiving insurance commissions from brokers — a practice that created incentives to over-insure and select brokers based on remuneration rather than value.

Both measures are awaiting secondary legislation. Government consultations have been completed, but the final regulations are still being developed. Leaseholders cannot yet rely on these provisions, though they represent the direction the market is heading.

Ground Rent Caps for Existing Leases: Expected Late 2028

Many leaseholders holding older properties still pay significant annual ground rents that can compound over time. The 2022 reform — which set ground rents on new residential leases at a peppercorn — does not apply retrospectively to existing leases. This means millions of leaseholders remain exposed to escalating ground rents under their original agreements.

The government’s most recent consultation (published in January 2026, consultation closed April 2026) proposes addressing existing lease ground rents through the Commonhold and Leasehold Reform Bill. The current proposal would cap ground rents at £250 per year initially, then reduce to a peppercorn over 40 years. Implementation is expected in late 2028 at the earliest.

Overseas investors holding older London properties with high or escalating ground rents should factor this timeline into their holding strategy. While the eventual cap is expected to provide meaningful relief, it is still roughly two years away and dependent on the next Bill being passed and commenced on schedule.

For properties already attracting a ground rent of £250 or below, the proposed cap provides immediate reassurance. For properties where ground rents are significantly higher — particularly where older leases contain review clauses that allow ground rents to double every 25 years — the wait for the cap may be material.

Impact on Overseas and Taiwanese Buyers Specifically

London concentrates the reform’s benefits disproportionately. Official government analysis estimates that 78% of the total value transfer from the enfranchisement and extension reforms will occur in London and the South East, with Westminster, Kensington and Chelsea, and Camden identified as the most affected boroughs — precisely the areas where Taiwanese, Hong Kong, and Singapore buyers are most active in the prime and super-prime new-build market.

What you can benefit from today:

• Apply to extend your lease or purchase the freehold the day after completion — no two-year wait
• Pursue Right to Manage claims in mixed-use buildings previously ineligible under the old 25% non-residential threshold
• Benefit from the removal of freeholder legal cost recovery in Right to Manage proceedings

What you are still waiting for:

• The dramatic reduction in lease extension costs from abolishing marriage value (most impactful for leases below 80 years)
• The new valuation methodology that significantly reduces enfranchisement costs across the board
• Standardised service charge documentation and building insurance commission reform
• Ground rent caps on existing older leases (expected 2028)

IREIS Properties recommends that buyers planning to extend a lease or pursue enfranchisement consult a qualified RICS Chartered Surveyor familiar with the current reform timetable before proceeding. The law is in active transition, and the applicable framework — and therefore the likely cost — will differ materially depending on whether the next Bill has been commenced by the time you apply.

Stamp duty varies depending on the overseas buyer surcharge, first-time buyer status, and whether you already own other residential property. Use our stamp duty calculator to calculate your precise liability. For a comprehensive overview of UK property holding costs and tax structures, see the UK Property Costs and Taxes Overview. For a full explanation of how service charges work, see our UK leasehold service charge guide for overseas buyers.

Commonhold: The Next Chapter for UK Property Ownership

Commonhold is the government’s proposed replacement for leasehold as the primary form of ownership for flats in England and Wales. Under Commonhold, each owner holds their home on a permanent, freehold basis with no time limit — there is no landlord, no ground rent, and no lease that shortens over time. Owners collectively manage the building’s common areas through a Commonhold Association.

The forthcoming Commonhold and Leasehold Reform Bill is expected to propose banning new leasehold flats in purpose-built residential developments, new house conversions, and commercial buildings redeveloped as flats. The government is consulting on timing to give the industry sufficient preparation time, but the direction of travel is unambiguous: leasehold for new-build flats in England and Wales is heading toward abolition.

For buyers evaluating London new-builds in 2026, this creates several practical considerations:

• Now (2026): New developments continue to be sold as leasehold. Quality developers offer 250-year or 999-year leases with peppercorn ground rents — fully compliant with current standards and structurally sound for long-term holding.
• Medium term: Once Commonhold becomes available and the legal framework matures, some developers may adopt it early, particularly at the premium end of the market where structural clarity is valued.
• Long term: Leasehold for new-build flats in England and Wales is expected to become legally unavailable once the ban takes effect, though timelines for existing leaseholds converting to Commonhold remain under consultation.

For overseas investors with long holding horizons, the practical conclusion from IREIS Properties is this: choosing a new-build with a long lease term (125 years minimum, ideally 250 or 999 years) and a peppercorn ground rent today positions you well for the transition. You already benefit from the reforms that are live, and you avoid the legacy ground rent issues that continue to affect older leasehold stock. When the remaining reforms come into force, you will be starting from the strongest possible position.

For a full grounding in how leasehold and freehold work in the UK, see IREIS Properties’ complete leasehold and freehold explainer. Browse our tax and legal guides for further resources. To explore available London new-build properties that meet current leasehold standards, visit IREIS Properties listings.