Three big changes to leasehold expected in 2025
The landscape of leasehold reform in England and Wales remains a complex and evolving one, marked by both anticipation and frustration.
A recent update from the government, issued in March 2025, has stirred renewed discussion among leaseholders and property professionals alike. This latest update follows years of promised changes, initially outlined in January 2021, which aimed to significantly change the leasehold system.
Ricky Coleman, leasehold solicitor at Peppercorn Law, expresses the sentiment shared by many: “while the government’s initial proposals brought hope for more affordable lease extensions and streamlined freehold enfranchisement, progress has been slow. Beyond the ban on new ground rents, tangible changes have been minimal. This delay has forced numerous leaseholders into costly lease extensions, driven by the necessity to sell, remortgage, or simply maintain the value of their properties with reducing lease terms”.
What is expected in 2025
In March 2025 the government affirmed its commitment to improve the leasehold system alongside its plans to eventually roll out commonhold, by bringing in the secondary legislation necessary to give effect to the Leasehold and Freehold Reform Act 2024, which promises significant changes to the rights of leaseholders. The expected major changes are:
A new right to extend the lease to 990 years
This will replace the existing right to extend by an additional 90 years and replace the ground rent with a peppercorn, making leases nearly as good as freehold, whilst retaining the leasehold covenant structure which is important to set out how shared insurance and repairs are carried out and paid for between flat owners, along with clauses controlling alterations amongst other matters.
The removal of landlords legal and valuation costs
This is a step away from the current system whereby the freeholder’s costs are payable by the leaseholder extending the lease by s.42 notice. Currently, there is only a requirement for costs to be ‘reasonable’ and the leaseholder can have the costs determined by Tribunal if considered too high. However, this is a process that incurs further costs and delays. Some exceptions to the new rule will be detailed in upcoming regulations this year.
Abolish marriage value
This is the substantial sum of money that kicks in when a lease has less than 80 years left. It can form the bulk of the premium payable to the freeholder and so this could save tens of thousands of pounds. The government has announced plans to open a consultation into how it can change the valuation process, with one of the key considerations being how it can remove marriage value and simplify the calculation. This may result in an online calculator which does away with the current model of drawn-out negotiations between each sides’ surveyor.
What next?
For those facing lease terms of less than 80 years, the decision to proceed with a lease extension now or wait for future reforms is complex. It hinges on individual circumstances, including the urgency to sell or remortgage, and the willingness to accept the inherent risks of fluctuating property values and legislative delays.
The government’s website is the main source for leasehold reform updates, with more details expected after the summer 2025 consultation on lease extension valuations. Until then, flat owners must navigate this uncertain terrain, weighing the potential benefits of future reforms against the immediate financial and practical considerations of their situations.
Kindly shared by Ricky Coleman is a practising solicitor and writer at legal blog Peppercorn Law
Picture courtesy of Adobe
