There has been a steady stream of leasehold reform news this year, and it is easy to lose track of what has actually changed. Here is an overview of the current situation.
Marriage value is still payable, the valuation rates that will decide the cost of future lease extensions are out for consultation until September, and the draft Commonhold and Leasehold Reform Bill is still working its way towards Parliament. We look at where leasehold reform actually stands in mid-2026, and what it means if you own a flat with a short lease.
Where leasehold reform stands in July 2026
The Leasehold and Freehold Reform Act 2024 (LAFRA) became law in May 2024, promising cheaper and simpler lease extensions, 990-year terms and the abolition of marriage value. More than two years on, only a handful of its provisions are actually in force. The two-year ownership rule was abolished on 31 January 2025, so a leaseholder can now begin a lease extension or freehold claim as soon as they buy. Changes to the right to manage followed in March 2025. The part that matters most to short lease owners, the new valuation scheme that will decide what an extension costs, remains switched off.
In addition to LAFRA, the government published its draft Commonhold and Leasehold Reform Bill in January 2026. The Bill was confirmed in the King's Speech in May 2026, and the Housing, Communities and Local Government Committee published its pre-legislative scrutiny report at the end of May, calling the draft a significant step while pressing for changes before the final Bill is introduced. Its headline measures include banning the sale of new leasehold flats, making commonhold the standard tenure for new blocks, and capping ground rents on existing leases at £250 a year.
Here is a summary of where the main reforms stand as of July 2026:
| Reform | Where it stands (July 2026) |
|---|---|
| Two-year ownership rule | Abolished. In force since 31 January 2025 |
| Right to manage changes | In force since March 2025 |
| Marriage value abolition | On the statute book but not in force. Marriage value is still payable |
| 990-year lease extensions | Not in force. Waits on the new valuation scheme |
| Valuation rates (deferment and capitalisation) | Consultation open from 15 July to 23 September 2026 |
| £250 ground rent cap on existing flats | Proposal in the draft Bill. Not yet law |
| Ban on new leasehold flats / commonhold | Draft Bill. Implementation not expected until 2028 or later |
Put in date order, the journey so far, and the road ahead, looks like this:
- May 2024The Leasehold and Freehold Reform Act becomes law
- January 2025Two-year ownership rule abolished
- March 2025Right to manage changes come into force
- October 2025High Court dismisses the freeholders' legal challenge
- January 2026Draft Commonhold and Leasehold Reform Bill published
- May 2026King's Speech confirms the Bill; scrutiny report published
- July to September 2026 We are hereValuation rates consultation runs
- Late 2026 / early 2027Court of Appeal hearing expected
- 2027-28, expectedNew valuation scheme commences: 990-year extensions, marriage value abolished
- 2028 or later, expectedCommonhold becomes the standard tenure for new flats
The valuation rates consultation: the numbers that decide everything
On 15 July 2026 the government finally launched its consultation on leasehold enfranchisement valuation rates, first promised for the summer of 2025. It closes on 23 September 2026.
The consultation sounds technical, and it is, but it will decide what every future lease extension costs. LAFRA replaces today's negotiated valuations with a standard valuation method, using two rates fixed by the government: the deferment rate, which values the freeholder's right to get the property back at the end of the lease, and the capitalisation rate, which values the ground rent. The consultation asks whether to keep the long-established Sportelli rates of 4.75% for houses and 5% for flats, update them using current market evidence, or take a different approach altogether. Small movements in these rates can change a premium by thousands of pounds, in either direction.
The key point for anyone with a short lease is that none of the headline valuation reforms, including 990-year extensions and the abolition of marriage value, can be switched on until these rates are set in secondary legislation. With the consultation only closing in late September, most commentators now expect the new valuation scheme to commence in 2027 or 2028 at the earliest.
Marriage value is still payable, and the courts are not finished
If your lease has dropped below 80 years, the current rules still apply in full. An extension premium today includes marriage value, which is the increase in the property's value created by the new lease, split 50/50 with the freeholder. It is the main reason premiums climb so steeply once a lease slips under the 80-year mark. The Leasehold Advisory Service explains the current position and the pending reforms on its lease extension reforms page.
The 80-year cliff
Every year that passes moves your flat further to the right along these bars. Under 80 years marriage value applies, and keeps applying, all the way down; below about 70 years many mortgage lenders also decline to lend, so the market narrows to cash buyers on top of the marriage value cost.
There is also a legal question mark hanging over the reforms. A group of freeholders challenged LAFRA's valuation changes, including marriage value abolition, by judicial review. The High Court dismissed the challenge in October 2025, but the case is heading to the Court of Appeal, with a hearing expected in late 2026 or early 2027. The government says it remains committed to the reforms, but the litigation is another reason the timetable could slip further.
Separately, in July 2026 the government announced a package of stronger leasehold protections due from 2027, including standardised service charge demands, annual building condition reports and protection from paying the freeholder's legal costs in disputes. These are welcome changes for people living in leasehold flats, but they do nothing to change the cost of extending a short lease.
Extend now, or wait for the reforms?
This is the dilemma every short lease owner faces, and there is no answer that fits everyone. The honest position in mid-2026 looks like this:
- Waiting could pay off. If marriage value abolition survives the courts and the new rates are favourable, extending after the reforms commence could be significantly cheaper for leases already under 80 years.
- Waiting is not free. A lease gets shorter, and a premium bigger, every year. A lease in the low 80s that waits for a reform arriving in 2027 or 2028 risks crossing the 80-year threshold in the meantime and paying marriage value under the current rules. Most advisers suggest owners in that position extend now rather than gamble on the timetable.
- The timetable keeps slipping. The rates consultation arrived a year late, the Court of Appeal is still to rule, and ministers have already conceded that parts of the wider programme will not be switched on in this Parliament.
- Lenders will not wait. Once a lease falls much below 70 to 75 years, many mortgage lenders decline to lend at all, which shrinks your pool of buyers regardless of what Parliament does next.
A sensible approach, suggested by several leasehold campaign groups, is to set yourself a personal deadline. If the reforms have commenced by then, extend under the new rules. If they have not, act anyway, and remember that a statutory lease extension itself typically takes the best part of a year from start to finish.
The third option: sell as-is at auction
There is a route that sidesteps the whole question. Rather than funding an extension premium, which can easily run into tens of thousands of pounds for a London flat, or holding on and hoping the reforms land soon, many owners simply sell the flat with the lease as it stands. Auction is well suited to this. The buyers who compete for short lease flats at auction are mostly cash buyers and investors who understand exactly how leasehold works, price the lease as it is, and often plan to extend it themselves after completion.
An auction sale also deals with the certainty problem. Short lease sales through an estate agent regularly collapse when a buyer's mortgage falls away late in the day. At an unconditional auction, contracts are exchanged the moment the hammer falls and completion typically follows within 28 days, with the lease details set out openly in the auction legal pack before anyone bids. We recommend the unconditional route rather than the conditional "modern method"; our guide explains the difference between unconditional and conditional auctions.
For the pros and cons of this route, and whether it is worth extending the lease before selling, read our full guide to selling a short lease flat by auction. Last year's update, Selling a Short Lease Flat in 2025, is also still worth a read for background on how the reforms have developed.
Next steps
Contact us to find out if your property is suitable for auction. Request a free pre-auction appraisal or feel free to call us on 0800 862 0206 - we'll be happy to help.
