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), 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
6. Check your ground rent terms — understand what you are committing to and whether extending the lease would resolve any issues

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), 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.