The Leasehold Reform (Ground Rent) Act 2022 banned new ground rents on residential leases above one peppercorn per annum. The Leasehold and Freehold Reform Act 2024 extended tenant rights, made extending a lease cheaper, and started the slow move toward abolishing leasehold on flats entirely.
Two years into the 2022 regime and six months into the 2024 reforms, what has actually changed for the BTL investor?
What is different in 2026
New-build flats sold since June 2022 have zero ground rent for the life of the lease. This is the single most important pricing correction in the market. Previous stock with escalating ground rents (100 and 250 year doublers) has been trading at 5 to 15% discounts to peppercorn equivalents, and the spread is widening as mortgage lenders tighten.
Lease extension has become materially cheaper. The marriage-value rule, which penalised extending leases below 80 years, was abolished. Extensions now reflect the true ground-rent yield, not a speculative freeholder premium. In practice this saves a buyer of an 82-year lease somewhere in the region of £8,000 to £15,000 on a typical central Manchester apartment.
Collective enfranchisement thresholds eased. The old 25% commercial-use cap was lifted to 50%, bringing many mixed-use city-centre blocks into play for collective purchase.
What did not change
Leasehold itself has not been abolished. The original plan to replace leasehold with commonhold on new flats is stuck in consultation, and the current drafting does not affect existing buildings. All the flats you bought before June 2022 still carry whatever ground rent terms they were originally sold with, unless you actively extend or enfranchise.
Practical implications for 2026 buyers
New-build flats purchased in 2026 or later: no ground rent, clean. Do not engage on any new-build scheme that attempts to charge ground rent.
Resale flats with escalating ground rents: the resale market is discounting heavily. If the ground rent doubles within the next 20 years, factor a 5 to 15% haircut into your bid. If the developer owns the freehold, push for a formal deed of variation to peppercorn before exchange.
Existing flats with short leases (below 80 years): extend early, not late. The 2024 reforms cut the cost materially, but the sooner extended the less the ground-rent compound works against you.
Watchouts
The ban on new ground rents does not apply to commercial leases, business-to-business arrangements or certain long leases on shared-ownership flats. Short-let and FHL properties marketed as commercial assets occasionally fall outside the rules. Check the class of tenancy before assuming peppercorn applies.
If you would like us to review the lease on an existing property, or assess an extension opportunity, ask.
