Leasehold Reform 2026: New Consultations Move Enfranchisement Reforms Closer

Adam Corcoran, Partner in our Real Estate team, considers the Government’s latest Leasehold and Freehold Reform Act 2024 consultations and what they could mean for leaseholders looking to extend a lease, acquire their freehold or pursue leasehold enfranchisement.

For many leaseholders, extending a lease or purchasing a freehold can be an expensive and uncertain process. Valuation disputes, professional fees and complex statutory rules can make it difficult to understand both the likely cost and the likely outcome before a claim is even started.

The Government has now taken another step towards implementing the Leasehold and Freehold Reform Act 2024 (LFRA 2024). On 15 July 2026, the Ministry of Housing, Communities and Local Government (MHCLG) launched two important consultations aimed at bringing some of the Act’s most significant enfranchisement reforms into force. At the same time, it confirmed its intention to proceed with wider leaseholder protection measures relating to service charges, transparency and litigation costs.

The Government has launched two separate consultations, each dealing with a different aspect of leasehold enfranchisement reform. Together, they are intended to make the process of extending a lease or buying a freehold simpler, more predictable and, potentially, less expensive.

First consultation: How much should a leaseholder pay to extend a lease or buy a freehold?

This consultation seeks views on the valuation rates that will be used when calculating the premium payable by leaseholders who wish to extend a lease, acquire a freehold, participate in a collective enfranchisement claim or buy out ground rent. In simple terms, the consultation is concerned with the method used to calculate the price of enfranchisement rights. The Government hopes that prescribing certain valuation assumptions will reduce disputes and provide greater certainty regarding likely costs.

Second consultation: Who should pay the costs of the enfranchisement process?

This consultation considers the circumstances in which one party should be able to recover professional costs from the other during a lease extension or freehold acquisition claim. The LFRA 2024 introduces a general principle that each side should ordinarily bear its own costs, and the consultation seeks views on the limited exceptions that should apply.

In short, the first consultation focuses on the price payable for the right itself, whilst the second focuses on who should bear the professional costs involved in obtaining that right.

The first consultation: Reforming the valuation process

One of the most challenging aspects of leasehold enfranchisement, including lease extensions and freehold acquisition claims, is determining how much a leaseholder should pay when exercising their statutory rights.

The LFRA 2024 introduces a new Standard Valuation Method, but important components of that methodology still need to be fixed through secondary legislation. The current consultation therefore seeks views on two key valuation assumptions: deferment rates and capitalisation rates.

Deferment rates

A deferment rate is used when valuing the landlord‘s future right to receive the property back at the end of the lease term.

The Government is consulting on three broad options:

• Retaining the established Sportelli rates (4.75% for houses and 5% for flats);
• Updating those rates using current market evidence; or
• Adopting a different approach altogether.

Capitalisation rates

Capitalisation rates are used to determine the present value of future ground rent income that a landlord will lose following enfranchisement.

The consultation asks whether there should be:

• A single rate applicable to all claims;
• Different rates depending on the nature of the ground rent provisions; or
• An alternative approach.

Although technical, these assumptions can significantly influence the premium ultimately payable by the leaseholder. The Government’s wider objective is to reduce uncertainty, minimise valuation disputes and create a more transparent system.

Why could these leasehold reforms benefit leaseholders?

The Government’s own accompanying guidance states that the reforms are intended to make extending a lease or buying a freehold “cheaper and easier”.

Whilst the final valuation rates have not yet been determined, the proposed approach could produce several practical benefits:

• Greater certainty about likely costs before a claim is commenced;
• Fewer valuation disputes between experts;
• Reduced reliance on complex valuation evidence;
• Potential reductions in professional fees; and
• A more straightforward enfranchisement process overall.

For many leaseholders, increased predictability may be almost as valuable as any direct reduction in the premium itself.

The second consultation: Reforming process costs

The second consultation concerns another issue that often causes frustration for leaseholders: costs.

Historically, leaseholders pursuing enfranchisement claims have frequently been required to pay not only their own legal and valuation costs but also certain costs incurred by the landlord.

The LFRA 2024 seeks to alter that position by introducing a general principle that each party should bear its own process costs. The consultation seeks views on the exceptions to that general rule.

The Government is proposing exceptions for:

• Certain low-value claims;
• Failed claims;
• Leasebacks arising on collective enfranchisement; and
• In some circumstances, resident-led management organisations facing insolvency risks.

The outcome of this consultation could have a material impact on the overall cost of bringing an enfranchisement claim, regardless of the premium eventually paid.

Wider leasehold reforms continue

The enfranchisement consultations were announced alongside confirmation that the Government intends to implement a substantial package of wider leaseholder protection measures under the LFRA 2024.

These measures include:

• Annual reports on building condition and planned major works;
• Standardised service charge demands and annual budgets;
• Greater transparency regarding building insurance arrangements;
• Rights to request information going back six years;
• Standardised service charge accounts; and
• Reforms to litigation costs recovery, including increased tribunal oversight of costs passed on to leaseholders.

Most of these changes are expected to be introduced through secondary legislation during 2026, with implementation anticipated during 2027.

Looking ahead

Both consultations close on 23 September 2026 and will help shape the final detail of the new enfranchisement regime. The Government’s direction of travel is clear: to reduce complexity, improve transparency and make it easier for leaseholders to exercise their statutory rights.

The final regulations have yet to be published, and the detail will matter. However, for leaseholders considering a lease extension, a collective enfranchisement claim or freehold acquisition, these consultations represent an important milestone in the most significant programme of leasehold reform for many years.

The Government is consulting on two fundamental questions: how much leaseholders should pay when extending a lease or purchasing a freehold, and who should bear the costs of the process. The answers will shape the operation of the Leasehold and Freehold Reform Act 2024 and could have a significant impact on future enfranchisement claims.

If you are considering a lease extension, purchasing your freehold or taking part in a collective enfranchisement claim, it is important to understand how the proposed reforms may affect your position.