Leasehold and Freehold Reform Act 2024 — Complete Landlord Guide to LAFRA 2024

990-year lease extensions and the abolition of marriage value

The two most financially significant LAFRA 2024 changes for leaseholder landlords:

• 990-year lease extension (up from 90 years for flats, 50 years for houses): Under the Leasehold Reform Act 1967 and the Leasehold Reform Housing and Urban Development Act 1993 (as amended by LAFRA 2024), leaseholders can now extend their lease to 990 years above the existing unexpired term. Previously, flat leaseholders could extend by 90 years (so a 50-year lease became 140 years) and house leaseholders by 50 years. The 990-year extension effectively creates a near-perpetual lease — for practical purposes equivalent to freehold ownership, subject only to the ground rent (which under the Act must be a 'peppercorn' rent — zero economic value). For BTL landlords who own leasehold flats, a 990-year extension eliminates the ongoing depreciation of the lease term and the need for future extensions
• Marriage value abolished for all leases: Previously, when a flat lease had less than 80 years remaining, the landlord (freeholder) could demand a premium reflecting 'marriage value' — the uplift in the combined value of the freehold and lease upon merger. Marriage value could add tens of thousands of pounds to the cost of extending a short lease. LAFRA 2024 abolishes marriage value across ALL leases — regardless of the unexpired term. This significantly reduces the lease extension premium for all leaseholders, but particularly for those with short leases who were previously most exposed to high marriage value premiums. The abolition applies to both the Leasehold Reform Act 1967 (houses) and the 1993 Act (flats)
• New premium calculation basis: With marriage value abolished, the lease extension premium is now based primarily on: (a) the ground rent capitalisation (the value of the freeholder's right to receive ground rent over the remaining lease term, discounted to present value); (b) the reversion value (the freeholder's right to receive the property back at the end of the lease — now much less valuable since the extension is to 990 years). The new calculation is more transparent and, in most cases, significantly cheaper than the old calculation for any lease with less than 80 years remaining. An independent RICS-qualified valuer should be instructed by both parties for a formal lease extension premium negotiation
• Zero ground rent on extension: Any lease extension under LAFRA 2024 must be granted at a peppercorn (zero) ground rent for the duration of the extension. This applies even if the existing lease had an existing ground rent — the extension element itself must be at peppercorn. Landlords who own freeholds and derive income from ground rent should note that lease extensions under the new regime eliminate the ground rent from the date of extension. This interacts with the Leasehold Reform (Ground Rent) Act 2022, which had already capped ground rents at peppercorn on new leases granted since 30 June 2022

Service charge transparency — new mandatory obligations on landlords

LAFRA 2024 significantly increases the transparency and documentation obligations for freeholder landlords:

• Mandatory service charge accounts format: LAFRA 2024 introduces a mandatory prescribed format for service charge accounts and summary information. Freeholder landlords (and their managing agents) must provide leaseholders with detailed, itemised service charge accounts in the prescribed format. The accounts must include: a breakdown of all costs incurred; supporting invoices and receipts (on request); a statement of the managing agent's fees; a summary of the buildings insurance policy (including premium and any commission received by the agent or freeholder). The new format is more prescriptive than the previous summary of relevant costs regime under the Landlord and Tenant Act 1985
• Buildings insurance commissions — mandatory disclosure: Freeholders and managing agents who receive commissions, introduction fees, or other payments from buildings insurance providers must disclose these to leaseholders. Under the old regime, commissions were often undisclosed — managing agents could place buildings insurance with a favoured insurer and receive a substantial commission without the leaseholders' knowledge. LAFRA 2024 requires: (a) disclosure of the commission amount (or a reasonable estimate where the final amount is not yet known); (b) the commission to be passed through to leaseholders as a credit against the insurance element of service charges or as a reduction in the premium charged. Hidden insurance commissions are no longer permissible — any commission received must be accounted for
• Expanded First-tier Tribunal jurisdiction for service charge disputes: The First-tier Tribunal (Property Chamber) has expanded jurisdiction to determine service charge disputes under LAFRA 2024. Leaseholders can challenge: (a) whether costs were reasonably incurred; (b) whether the standard of service was reasonable; (c) compliance with the new mandatory accounts format; (d) the amount of administration charges; (e) insurance commission disclosure compliance. The burden on freeholders to prove reasonableness is maintained — LAFRA 2024 does not change this fundamental principle but expands the categories of challenge available
• Recognition of leaseholder associations: LAFRA 2024 strengthens the rights of recognised tenants' associations (RTAs) to obtain information and participate in building management decisions. RTAs representing a majority of leaseholders gain additional information rights — including the right to request full service charge documentation. Freeholder landlords of blocks with multiple leaseholders should be aware that established or newly formed RTAs have stronger statutory rights under LAFRA 2024 to scrutinise service charge expenditure

Administration charge caps and ban on new leasehold houses

Two further significant changes affecting different categories of landlord:

• Administration charge caps: LAFRA 2024 caps the administration charges that freeholders and managing agents can levy on leaseholders for consent to: (a) subletting; (b) assignment (sale) of the lease; (c) alterations (consent to works); (d) mortgage or remortgage of the leasehold. Previously, these charges were regulated only by the Landlord and Tenant Act 1985's reasonableness test — with no prescribed maximum. Some managing agents charged several hundred to over a thousand pounds for relatively routine consent to sublet or assign. LAFRA 2024 introduces cap levels (set by secondary legislation) on these charges. BTL landlords who own leasehold flats and sublet them (effectively subletting from the freeholder's perspective) may see a reduction in consent fees charged by their freeholder
• Ban on new residential leasehold houses — with exceptions: LAFRA 2024 provides that new residential houses in England and Wales cannot be sold on a leasehold basis from the date the relevant provision comes into force. This ends the practice of developers building and selling houses as leasehold (typically with escalating ground rents) — a practice that affected hundreds of thousands of buyers, primarily in England, from the 1980s to the early 2020s. Exceptions include: shared ownership properties; community-led housing developments; properties where the lease exists to facilitate a mortgage (a technical mechanism in some residential mortgage structures); certain national security related properties. BTL investors purchasing houses should ensure any house offered on a leasehold basis either predates LAFRA 2024 or falls within a valid exception
• Right to manage reform — easier for leaseholders to take over management: LAFRA 2024 makes it easier for leaseholders to exercise the Right to Manage (RTM) — the right for a group of leaseholders to take control of building management from the freeholder without buying the freehold. Key changes include: removing the previous requirement that 25% of flats must be let as long leases (simplifying qualification for some blocks); allowing RTM in mixed-use buildings where up to 75% of the building floor area is commercial (previously 25% commercial was the threshold — this excluded many ground-floor retail/upper-floor residential blocks). Freeholder landlords of blocks where leaseholders have previously failed RTM qualification may now find their leaseholders qualifying under the new thresholds
• Phased commencement — what is and is not yet in force: Many LAFRA 2024 provisions require commencement orders or secondary legislation (regulations, prescribed forms, prescribed accounts formats) before coming into force. The ban on new leasehold houses, the marriage value abolition, and the 990-year extension right are among the provisions that came into force in phases. Freeholder and leaseholder landlords should monitor MHCLG commencement order announcements and check whether specific provisions have been brought into force — not all provisions described in this guide may be simultaneously operative. Legal advice is recommended for any property transaction involving LAFRA 2024 provisions

Practical implications for BTL landlords with leasehold flats

What LAFRA 2024 means for landlords who own leasehold flats and let them to tenants:

• Extending short leases becomes cheaper: BTL landlords who own leasehold flats with short unexpired lease terms (under 80 years, and especially under 60 years) benefit most from LAFRA 2024's marriage value abolition and 990-year extension right. Previously, a 55-year lease on a £200,000 flat could attract a marriage value premium of £20,000-£40,000 on top of the ground rent capitalisation and reversion value. Under LAFRA 2024, the same extension calculation (without marriage value) could be significantly cheaper. Landlords with short-lease BTL flats should obtain a RICS lease extension valuation to assess the updated premium before deciding whether to extend
• Mortgageability — short leases and lender requirements: Mortgage lenders typically require residential properties (including BTL properties) to have a minimum unexpired lease term at completion of 70-85 years (varying by lender). Properties with very short leases (under 70 years) can be difficult to mortgage or remortgage. LAFRA 2024's cheaper lease extension route makes it more financially attractive to extend leases to restore mortgageability — benefiting BTL landlords who wish to remortgage short-lease properties
• Service charge budgeting — new transparency requirements: BTL landlords who own leasehold flats are on the receiving end of service charges from their freeholder. The new service charge transparency and administration charge cap provisions benefit leaseholder-landlords — they can challenge unreasonable service charges more effectively, and the new accounts format gives clearer visibility of where service charge money is being spent. BTL landlords should request full service charge accounts in the new format and scrutinise them
• Freeholder landlords — compliance obligations: BTL landlords who also own freeholds (or commonhold interests) and collect service charges from leaseholders face new compliance obligations under LAFRA 2024. Service charge accounts must be in the new prescribed format. Any insurance commissions must be disclosed. Administration charges must comply with the new caps. Failure to comply exposes freeholder landlords to First-tier Tribunal challenges from leaseholders and potential cost awards

Frequently asked questions