The High Court’s decision to uphold the Leasehold and Freehold Reform Act 2024 marks an important shift in the UK property market. While much of the attention has focused on what it means for leaseholders, there is also impact for conveyancers and lenders. This is a major step towards reducing risk and bringing greater certainty to transactions.
For lenders, one of the biggest changes is the removal of what was often referred to as the 80 year problem. Under the previous regime, once a lease dropped below 80 years, the cost of extending it increased sharply due to marriage value. This created a sudden drop in value and, in many cases, made properties difficult or impossible to mortgage. By removing marriage value, the new framework smooths that curve. Leasehold properties no longer fall off a cliff in the same way, giving lenders greater confidence in the long term security of their lending.
For conveyancers, the reform addresses a different but equally persistent issue. Onerous ground rents, particularly those that doubled over time, have caused countless transactions to stall or collapse late in the process. The move towards 990 year lease extensions at a peppercorn rent fundamentally changes the nature of these properties. In practical terms, many leaseholds begin to resemble freeholds, removing hidden financial burdens that previously sat beneath the surface. This reduces professional risk and makes it far easier to stand behind the idea that a title is genuinely marketable.
Importantly, these changes are not limited to new properties. Existing leaseholders stand to benefit in a meaningful way. The removal of the two year ownership requirement means leaseholders can act sooner, without delay. When they do choose to extend, they will benefit from more favourable valuation methods and significantly longer terms. There is also ongoing movement towards capping ground rents on existing leases, which, if implemented, would address one of the most problematic features of older arrangements.
That said, the market is not yet fully settled. There is a degree of uncertainty while final valuation mechanisms are clarified, and this is already creating a short term pause in some transactions. Buyers and conveyancers alike are waiting for greater clarity before moving forward with certain decisions.
Even so, the direction of travel is clear. By removing some of the more complex and unpredictable elements of leasehold ownership, the reforms move the system towards something more stable and transparent. For conveyancers and lenders, that means fewer surprises and more reliable outcomes. For leaseholders, it marks the beginning of a shift away from the idea of a diminishing asset and towards something that holds its value with far greater certainty.