Leasehold and Freehold Reform Act 2024: A Guide for UK Estate Agents

The Leasehold and Freehold Reform Act 2024 (LFRA) is the most significant piece of English leasehold legislation since the Commonhold and Leasehold Reform Act 2002. For residential estate agents, particularly those working with leasehold properties in England, understanding the key reforms is essential — both for advising clients accurately and for navigating conveyancing enquiries that will increasingly reference the Act.

Marriage value abolition

The old position: When a leaseholder exercised their right to a statutory lease extension under the Leasehold Reform, Housing and Urban Development Act 1993, the premium payable to the freeholder included a share of "marriage value" — the increase in the value of the property that arises when a short lease is extended. For leases with fewer than 80 years remaining, marriage value could represent a substantial additional cost.

The new position: The LFRA abolishes marriage value for statutory lease extension premiums. The premium is now calculated on a simplified formula without a marriage value element.

What this means for estate agents:

• Properties with short leases (below 80 years) become significantly more affordable to extend, which improves their saleability
• The "80-year cliff" that previously caused serious issues in mortgage lending and resale becomes less acute
• Premium calculations for lease extensions are more predictable — reducing the disparity between freeholder opening positions and leaseholder counter-offers
• You should update any standard advice you give buyers about minimum remaining lease length — the old 83-year rule of thumb (leave 3 years before the 80-year threshold) is less critical now

Lease extension — changed terms

Beyond marriage value, the LFRA makes several other changes to statutory lease extension:

Extension length — leaseholders can now extend leases by 990 years (up from 90 years). A single extension effectively sets the term for the property's useful life.

Ground rent — extended leases must be at a peppercorn ground rent. This aligns with the Leasehold Reform (Ground Rent) Act 2022, which already prohibits ground rent on new leases.

Eligibility — the two-year ownership requirement for statutory lease extension has been removed. A buyer can immediately exercise a lease extension right after purchase. This changes the conveyancing dynamic: buyers no longer need to factor in two years of ownership before they can extend.

Valuation assumptions — the Act changes the valuation assumptions used for calculating premiums, generally in favour of leaseholders.

Right to Manage — expanded access

The Right to Manage (RTM) allows qualifying leaseholders to take over the management of their building without having to prove landlord fault. The LFRA expands access to RTM in two key ways:

Threshold change — the non-residential premises threshold rises from 25% to 50%. Buildings with up to 50% non-residential floor space (shops, offices) can now qualify for RTM. This opens RTM to a much wider range of mixed-use buildings, particularly urban high streets with residential above commercial.

Multiple buildings — the LFRA simplifies the process for RTM companies to take over management of multiple buildings under a single RTM company structure, reducing administration for larger residential estates.

What this means for agents: if you are advising on a mixed-use block with residential above commercial, RTM is now potentially available where it previously was not. This changes the negotiating dynamic with freeholders.

Collective enfranchisement — changes

The LFRA also modifies the collective enfranchisement (freehold purchase) process:

• Participation threshold — reduced from 50% to 50% of qualifying leaseholders (unchanged in headline terms but with changed qualification rules)
• Premium calculations — adjusted in line with the lease extension valuation changes (marriage value removal, changed assumptions)
• Process improvements — the Act simplifies aspects of the claim process to reduce delay and cost

Commonhold — the roadmap

The LFRA does not implement commonhold directly but establishes the legislative framework for a transition away from leasehold. The government has committed to making commonhold the default tenure for new multi-unit residential buildings.

Commonhold means that owners hold their flat outright (freehold) and are jointly responsible for the common parts through a commonhold association — similar to the condominium model in other jurisdictions.

For estate agents: commonhold properties are beginning to appear in the market. Agents need to understand:

• The title structure (commonhold unit, commonhold community statement)
• How commonhold association fees work (analogous to service charge)
• How to explain commonhold to buyers who are unfamiliar with the tenure
• Lender attitudes to commonhold (improving, but not universally positive)

Ground rent — the 2022 Act position

The Leasehold Reform (Ground Rent) Act 2022 (preceding the LFRA) already prohibits ground rent on new regulated leases. "Regulated" covers most new residential leases. This means:

• All new residential leases in England must have a peppercorn (£0) ground rent
• Any provision requiring a ground rent payment in a new residential lease is void
• Existing leases with ground rent obligations are not affected by the 2022 Act — though the LFRA provides a mechanism to eventually cap or reduce these

For agents marketing existing leasehold properties: the ground rent position remains a material disclosure point. Buyers and their lenders want to know whether the ground rent is fixed, reviewed, or indexed — and whether it exceeds lender thresholds.

Where AI helps

The LFRA generates significant advisory and conveyancing complexity. AI tools can assist with:

• Lease analysis — identifying the key terms (term remaining, ground rent, service charge, extension history) from a lease document quickly, before a buyer's offer is accepted
• Premium estimation — providing a first-pass estimate of a statutory lease extension premium under the new LFRA valuation assumptions, for client briefing purposes (not a formal valuation)
• Client explanations — drafting clear, accurate explanations of the LFRA changes for buyers and sellers who are unfamiliar with leasehold law
• RTM eligibility check — quickly assessing whether a building meets the RTM criteria under the reformed rules

AI cannot produce a formal premium valuation (this requires a RICS surveyor), advise on disputed enfranchisement claims, or represent clients in the First-tier Tribunal. But for the large volume of explanation and triage work the LFRA creates, AI tools significantly reduce the time involved.

Practical checklist for estate agents

For every leasehold instruction:

• Check the lease term remaining — note any that are below 90 years and advise buyers accordingly
• Check the ground rent — flag any escalating or variable ground rent to buyers and their solicitors
• Confirm whether the building qualifies for RTM — particularly for mixed-use buildings now within the 50% threshold
• Understand the building's management structure — RTM company, professional manager, or freeholder-managed?
• For short leases, provide a first-pass indication of extension cost under the LFRA assumptions and recommend the buyer instructs a specialist surveyor

The LFRA has made leasehold property more accessible and more manageable for leaseholders. For estate agents who understand the changes, it is an opportunity to add genuine value at a critical point in the buying and selling process.