By extension.lease – Experts in lease extensions and freehold purchase
Why Waiting for Leasehold Reform Could Cost Flat Owners Dearly
For years, leasehold reform has been framed as the cavalry coming over the hill for flat owners across England and Wales. Headlines have promised cheaper lease extensions, the abolition of “marriage value,” and a fairer system overall.
But the latest signals from Housing Minister Matthew Pennycook make one thing clear: reform is coming but it will be complex, staged, and slow to implement. Read the housing ministers full speech from 29th April 2026 here.
For many leaseholders, particularly in London, waiting could prove to be an expensive gamble.
A Decade of Flatlining Values
At the heart of any lease extension calculation is a simple principle: the premium is linked to the market value of the flat.
And in London, those values have barely moved.
Official data from HM Land Registry’s UK House Price Index shows that flat and maisonette prices in London have effectively stagnated over the past decade, with the index moving within a relatively narrow band since 2016.
The chart from Land Registry house price data above tells the story clearly. While there are minor peaks and dips, there is no sustained upward trajectory. In practical terms:
- London flat values have increased by only around 5–6% over roughly ten years
- Periods since 2022 have even seen outright declines
- Performance has significantly lagged houses and the wider UK market
This is highly unusual in a property market that has historically relied on capital growth and it matters enormously for leaseholders.
Lease extension premiums are calculated by reference to the current market value of the flat on a hypothetical long lease basis. In a stagnant market, that value and therefore the premium is effectively suppressed.
But markets do not stay flat forever. If values begin to recover, whether due to falling interest rates, improved mortgage availability or renewed demand the cost of extending a lease will increase accordingly.
Waiting for reform, therefore, is not a neutral decision. It is a direct exposure to:
- Future house price growth
- Higher valuation inputs
- Consequently higher lease extension premiums
In simple terms today’s ‘flat’ market may represent a pricing floor while waiting risks paying tomorrow’s uplift.
A Clear Message from Government: Reform Will Take Time
In his recent speech (29th April 2026) on leasehold and commonhold reform, Matthew Pennycook reaffirmed the government’s ambition to fundamentally reshape the system but stressed that this will be delivered through a careful, phased transition.
The direction of travel is clear: a long-term move away from leasehold towards commonhold. But the route there is complex.
The government has made clear that reform must balance:
- Leaseholder protections
- Freeholder and investor rights
- Stability in housing and mortgage markets
As a result, change is and will continue to be delivered in multiple stages, including:
- Fixing defects in the existing Leasehold and Freehold Reform Act (LAFRA)
- Introducing a new Commonhold and Leasehold Reform Bill
- Consulting further on valuation mechanisms and implementation
This is not a single legislative event, it is a multi-year programme.
For leaseholders hoping for imminent cost savings, the message is clear:there is no immediate switch to a cheaper system.
The Unfinished Business of Existing Reform
Crucially, the current system is already in a state of transition.
The government has acknowledged that LAFRA contains significant technical flaws that must be corrected before key provisions, particularly those affecting valuation can be brought into force.
This creates a layered delay:
- Existing legislation must be amended
- New legislation must be introduced
- Further detail must be consulted on and implemented
Each step introduces both time risk and uncertainty.
For leaseholders, this means reform is not just delayed, it is contingent on a sequence of further changes.
A New System But One with Unknown Outcomes
Even once reform is implemented, the outcome is far from predictable.
The proposed system is expected to include:
- The removal of the need to pay marriage value for leases with less than 80 years
- Standardised capitalisation and deferment rates
- A more uniform national valuation framework
However, these critical inputs, particularly valuation rates have not yet been defined, and that uncertainty is significant. Even small movements in these rates can have a substantial impact on lease extension premiums, especially in London where property values are high.
There is also a risk that a ‘one size fits all’ valuation framework could distort premiums across different parts of the country. While the proposed removal of marriage value is widely seen as beneficial to leaseholders, there is a real possibility that landlords could instead be compensated through the prescription of lower capitalisation rates, effectively maintaining or even increasing premiums.
This reflects a key constraint on the legislation: freeholders must be “adequately compensated”, a principle underpinned by protections in Article 1 of Protocol 1 (A1P1) of the European Convention on Human Rights. In practice, this means that any reduction in one part of the valuation may be offset elsewhere.
Moreover, the government has made clear that reform must also maintain confidence in property investment markets.
This raises an important point: the system cannot be designed solely to minimise costs for leaseholders.
Winners, Losers and the Marriage Value Trade-Off
The abolition of marriage value is often presented as the headline benefit of reform. But its impact is not uniform.
- Leaseholders with short leases (below 80 years) are likely to benefit
- Leaseholders with longer leases who currently pay no marriage value may see little direct gain
If new valuation rates are set unfavourably or there is a one size fits all framework, those with longer leases could even face higher premiums, effectively subsidising those with shorter terms.
This redistribution effect is rarely discussed but it is a logical consequence of moving to a simplified, standardised system and the key will be in the detail yet to be disclosed.
The Cost of Waiting
When viewed together, the risks of waiting become clear.
Extend now:
- A well-established legal framework
- Transparent and understood valuation methodology
- Depressed underlying property values given current market conditions for flats
Wait for reform:
- No fixed implementation timeline
- Legislative delays and sequencing risk
- Unknown valuation assumptions
- Exposure to future price growth
The government’s own position reinforces this uncertainty. Reform is ambitious but also incremental, complex, and dependent on further legislation not to mention the risks of an ongoing judicial challenge by a consortium of large freeholders.
A Strategic Decision, Not a Political One
Leasehold reform is undoubtedly necessary, and its long-term direction is clear. But for individual leaseholders, the decision to extend a lease is not political, it is financial.
Right now, London’s flat market offers something rare: stability. Combined with a known valuation framework that creates certainty. By contrast, the reform landscape, despite political momentum is currently defined by delay, complexity and unknown outcomes.
For leaseholders, the key question is simple: Is it worth waiting for a system that may arrive years later and may not benefit you in the way you expect?
In a market where values have stood still for a decade, timing is everything and waiting could come at a price.
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