The Leasehold and Freehold Reform Act 2024 introduces major changes to how leasehold properties are valued in the UK, particularly through the abolition of marriage value.
For leaseholders with short leases, this reform could significantly reduce the cost of lease extensions and freehold purchases.
Although the key provisions are not yet in force, they are expected to take effect in late 2025.
This article explores what marriage value is, how the law is changing, and what it means for property owners.
What Is The Concept Of Marriage Value In Leasehold Properties?
Marriage value refers to the financial benefit that arises when the leasehold and freehold interests in a property are combined. Typically, this occurs during a lease extension or when a leaseholder purchases the freehold.
The concept is built on the idea that the combined ownership is worth more than the sum of its separate parts.
Historically, when a lease had fewer than 80 years remaining, the leaseholder had to pay the freeholder 50% of this projected increase in value, known as the marriage value.
This created a significant financial hurdle for many leaseholders seeking to protect the long-term value of their property.
For example, a leaseholder with a flat valued at £250,000 with a 75-year lease could find the cost of extension increase by tens of thousands of pounds due to marriage value.
The law required this uplift to be split equally between the leaseholder and freeholder, regardless of how long the leaseholder had owned the property.
Marriage value became a particularly contentious issue for leaseholders with leases close to expiring or under 80 years, often catching buyers unaware during conveyancing or remortgaging processes.
How Is The Marriage Value Changing Under The 2025 Leasehold Reform?
Legislative Shift Under The Leasehold And Freehold Reform Act 2024
The Leasehold and Freehold Reform Act 2024 introduces a fundamental change in the way leasehold property valuations are calculated by abolishing marriage value.
Under previous legislation, when a leaseholder sought to extend a lease with fewer than 80 years remaining, the freeholder was entitled to 50% of the “marriage value” the theoretical increase in value resulting from the extension.
The 2024 Act removes this requirement, meaning that marriage value will no longer be payable, regardless of the lease term. This marks a turning point in leasehold reform, aimed at reducing the financial burden on leaseholders and increasing fairness in property transactions.
Removal Of The 80-Year Threshold Penalty
Previously, the 80-year mark acted as a financial cliff edge. Once a lease fell below that threshold, the cost to extend rose sharply due to the inclusion of marriage value.
This reform effectively removes the penalty associated with leases dropping below 80 years, making the cost of extending more predictable and less punitive.
Leaseholders will no longer face inflated extension costs based on an arbitrary time limit. This change is expected to encourage earlier and more frequent lease extensions, improving long-term property planning.
Introduction Of A Standardised Valuation Process
With marriage value removed, the government plans to introduce a consistent valuation method for lease extensions and freehold purchases. This includes fixed rates for deferment and capitalisation to create a uniform formula applicable across England and Wales.
The result will be a more transparent and accessible system, reducing reliance on professional negotiations and potentially lowering legal and surveyor fees for leaseholders. A publicly available calculator is also in development, further simplifying the process for homeowners.
Who Benefits The Most From The Removal Of Marriage Value?
Leaseholders With Short Leases
The most immediate and substantial benefit will go to leaseholders whose leases are under 80 years, as they were the only group previously affected by marriage value.
For these individuals, the cost of lease extensions or freehold acquisitions will be significantly lower, as they no longer need to pay the 50% share of the marriage value to the freeholder.
This change can potentially save leaseholders tens of thousands of pounds, depending on the property value and location.
First-Time Buyers And Existing Homeowners
Many first-time buyers avoid properties with short leases due to the high extension costs. With the abolition of marriage value, these properties will become more attractive, expanding access to previously less desirable homes.
Current homeowners with leases close to 80 years will also benefit, as the urgency to extend before hitting the threshold is eliminated. This provides greater flexibility in financial planning and allows leaseholders to time extensions more strategically.
Participants In Collective Enfranchisement
Blocks of flats where residents are seeking to purchase the freehold together known as collective enfranchisement stand to gain from the removal of marriage value. The cost of buying the freehold will be lower and more equitable, particularly for those units with shorter leases.
Collective enfranchisement has historically been complicated by varying lease lengths and associated marriage values. By removing this variable, the reform promotes more successful and less contentious group purchases.
Buyers In High-Value Urban Areas
Leaseholders in cities such as London and Manchester where short leases are common and property values are high—have often faced the largest marriage value premiums.
These individuals are likely to experience the greatest cost savings under the new system, enhancing housing affordability in key metropolitan markets.
What Happens To Lease Extensions After The Reform?
Lease extensions will undergo a significant transformation under the new legal framework. Without marriage value in the valuation formula, the process becomes less costly and more transparent.
Notable changes to the lease extension process include:
- Lease extensions will be calculated using standardised rates
- The statutory lease extension term will increase from 90 years to 990 years
- Leaseholders will not pay ground rent on the extended term
- Overall valuation costs are expected to decrease, especially for short leases
The government has also committed to developing a user-friendly calculator to help leaseholders estimate extension costs under the new rules. This will provide greater predictability for those planning to extend in the future.
Lease Extension Changes – Before vs After Reform
| Feature | Pre-Reform (Before 2025) | Post-Reform (From 2025/2026) |
| Lease Extension Term | 90 years | 990 years |
| Marriage Value | Included in valuation if < 80 years | Abolished from all valuations |
| Ground Rent | Peppercorn for extension | Peppercorn (no change) |
| Valuation Method | Complex and variable | Standardised formula |
| Cost Predictability | Low | High |
This change also reduces disputes between leaseholders and freeholders over valuation, often requiring tribunals or expert negotiation.
How Will Freeholders Be Compensated Under The New Rules?
One of the more complex aspects of the reform is its impact on freeholders, who stand to lose a key source of income once marriage value is removed.
The government acknowledges this concern and has stated that valuation rates will be adjusted to ensure fair compensation to freeholders.
Several measures are being proposed to balance the financial interests:
- Revised deferment and capitalisation rates to reflect long-term value loss
- Possible transitional arrangements to allow freeholders to adapt
- A national calculator to apply consistent valuation formulas across the country
Critics argue that removing marriage value undermines the investment value of freeholds. However, leasehold reform campaigners point out that the marriage value system disproportionately favoured freeholders and created an exploitative environment for leaseholders.
Freeholder Income Considerations – Old vs New System
| Income Stream | Before Reform | After Reform (Proposed) |
| Marriage Value | 50% share from leaseholder | Removed |
| Ground Rent | Capped/Reduced | Peppercorn rent |
| Extension Premium Income | Variable, often higher | Lower but standardised |
| Legal Disputes | More frequent | Expected to reduce |
The government’s goal is to ensure that while freeholders lose marriage value, they still receive reasonable compensation based on predictable valuation metrics.
What Are The Wider Implications Of The Leasehold Reform For UK Homeowners?
The abolition of marriage value is just one part of a more comprehensive reform package that aims to improve homeownership in England and Wales.
For many leaseholders, the current system is seen as outdated, expensive, and unnecessarily complex.
Implications of the reform include:
- Higher property values for leasehold flats that previously had short leases
- Increased confidence among buyers, especially first-time buyers
- Reduced legal and surveyor fees due to standardised processes
- Improved access to mortgages on previously unmortgageable short leases
- Acceleration of commonhold adoption, as leasehold ownership becomes less appealing to developers
Mortgage lenders, estate agents, and legal professionals will all need to adapt their practices to reflect the changes brought by the reform.
The shift could encourage broader moves toward alternative models of ownership, such as commonhold, which offer more security and control to homeowners.
What Should Current Leaseholders Do Before The 2025 Changes Come Into Effect?
Although the legislation has been passed, its implementation timeline remains uncertain. As such, leaseholders must make informed decisions based on their individual circumstances.
Steps to consider:
- Review your lease term and determine if you are close to the 80-year threshold
- Get a professional valuation to understand the cost of extension under current rules
- Consider acting now if your lease is near 80 years and property values are rising
- Monitor government announcements for updates on when provisions will take effect
Some leaseholders may benefit financially by waiting for the reforms, especially those with very short leases.
However, others may find that acting now avoids further complications or potential price increases if demand for extensions spikes after the new law is in effect.
Legal experts and valuation professionals can offer tailored advice, especially in complex situations where multiple leaseholders in a block are planning collective enfranchisement or when the freeholder is absent or uncooperative.
How Does The 2025 Reform Fit Into The Broader UK Property Law Reform?
The Leasehold and Freehold Reform Act 2024 forms part of a long-term governmental agenda to modernise housing laws and promote fairness in property ownership.
It builds upon earlier reforms, such as the Leasehold Reform (Ground Rent) Act 2022, which banned ground rents for new leases.
The overarching goals of this legislative direction are:
- To make leasehold ownership simpler and less expensive
- To reduce the power imbalance between leaseholders and freeholders
- To transition the UK housing system toward commonhold and freehold
- To encourage transparency in residential property transactions
By standardising key processes and eliminating outdated cost mechanisms such as marriage value, the government aims to reshape property ownership for future generations.
These reforms are expected to make leasehold property more attractive, improve consumer confidence, and reduce the adversarial nature of leasehold negotiations.
Conclusion
The abolition of marriage value through the Leasehold and Freehold Reform Act 2024 marks a significant shift in leasehold property law.
By removing this costly element from lease extension and freehold purchase calculations, the reform aims to create a fairer, more accessible housing system.
While the provisions are not yet in effect, leaseholders should stay informed and seek professional advice.
Understanding these upcoming changes is essential for making informed property decisions ahead of the 2025 implementation.
FAQs About Leasehold Reform and Marriage Value
Why was the marriage value considered unfair to leaseholders?
Marriage value was often seen as a penalty for leaseholders whose leases dropped below 80 years. It significantly increased costs, limiting access to lease extensions and reducing property value.
Will the removal of marriage value apply to all leaseholds?
The removal will apply to all leaseholders seeking to extend or purchase their freehold once the legislation comes into force. Until then, current rules remain.
Can freeholders challenge the new valuation method?
Freeholders may provide input during the government consultation phase, but once implemented, the new valuation methods will be legally binding.
How is the 80-year lease rule changing after 2025?
The rule itself is effectively eliminated as marriage value is abolished. Leaseholders will no longer be financially penalised when their lease drops below 80 years.
What are the key dates to know for the reform implementation?
While the Act passed in 2024, the provisions are expected to take effect in late 2025 or 2026, depending on the outcome of government consultations.
How do I calculate my lease extension cost now?
You should consult a professional surveyor or lease extension specialist. The current rules still apply until the reform provisions are in force.
Will the reform affect leasehold flats and houses differently?
The principles apply to both, but leasehold houses are already being phased out for new sales, while flats remain more common in leasehold ownership.
