"No change is without complications and it has become apparent that practical problems related to the registration gap may still scupper any progress." for leaseholders when remortgaging or selling their existing property in circumstances where the lease has fallen below the marriage value. This often results in lenders being unwilling to lend. The marriage value is a concept used by surveyors when valuing a property. If the unexpired term of the lease remains above 80 years at the time the lease extension application is made, the Marriage Value is nil. However, if the lease term drops below 80 years, surveyors take this into account and the premium calculation is usually higher. The premium is the sum payable to the landlord for the extension of the lease term.
The Leasehold and Freehold Reform Act 2024 (LAFRA) received Royal Assent in May 2024, marking a significant step in the ongoing reform of leasehold and freehold property law in England and Wales. LAFRA introduced fundamental changes to the legal process with a view to making the residential leasehold reform easier, cheaper, fairer and transparent for leaseholders wanting to extend their leases and buy their freeholds. Although promising, LAFRA requires secondary legislation to be in place before core elements can be implemented. In this article, Nisha Patel, who has recently joined Harold Benjamin from her previous practice where she was the Head of Department for Residential Lease Extensions, discusses whether changes can be expected to be implemented this year, or if the issues will be as intractable as ever.
The Step Forward
Earlier this year, regulations to support the implementation of section 27 of LAFRA were introduced. This marked a significant shift suggesting that some movement can be expected this coming year. Section 27 abolishes the two-year ownership rule for lease extensions of houses and flats and the right to acquire the freehold of houses under existing legislation. This has proved necessary because, historically, leaseholders of both flats and houses were required to be the registered owner of their property for a minimum of two years before being able to extend the lease of their flat or house, or purchase the freehold. This requirement has been a cause of frustration for new homeowners when purchasing a new leasehold property, and
Section 27 of the Act removes the ownership time limits on leasehold
applications. This is significant because it provides leaseholders with greater flexibility, promotes the lease extension process by removing one of the few barriers, and marks a step forward for leaseholders.
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THE LEGAL CORNER MAGAZINE | ISSUE 11 ARPIL '25 HB
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