Leasehold Sales – Will They Become Easier In 2026?

The property market in 2025 was, well, forgettable. Uncertainty was rife and "kite-flying" became a norm. Prices came down; transaction volume was down; and a lot of sales and purchases started, stalled, then collapsed altogether. When properties were well-priced; and both sellers and buyers were well-prepared, transactions went through happily, as is always the case.

Since the Budget, agents seem much more confident that the uncertainty is passing. They tell us that values won't rise, and the volume of transactions should increase. Buyers are starting to feel more confident; they are still in charge, so asking prices need to be realistic, not ambitious.

But in leasehold flat transactions, there is only so much preparation that buyers and sellers can do. There are usually third parties in the room: the landlord and their solicitors, the manager, the neighbours, perhaps an RTM company (and their solicitors); none of whom have the same imperatives as the buyer and the seller.

But here's some good news. One of the hindrances to leasehold transactions has gone away: the "ground rent trap". Imagine, you have a London flat with a long lease carrying an annual ground rent of £1,000 or more (or a ground rent that will increase to above £1,000 during its term). Or you have a flat outside London with a ground rent of £250 or more. The drafting of the Housing Act 1988 meant that, accidentally, your valuable prime long lease was actually (whisper it) an Assured Tenancy. It met all the conditions. Since this accident was discovered, all mortgage lenders (and all prudent buyers) have been asking for a deed of variation of that lease to lower the ground rent and to provide a mortgage protection clause. Why? Because following normal rules for any Assured Tenancy, the landlord could end your lease terrifyingly quickly (for non-payment of rent) instead of using the "normal" forfeiture process for a standard long lease, which inevitably gives rise to relief.

This was a massive problem requiring a lot of London lease transactions to pause whilst deeds of variation, and often premiums, were agreed with the landlord. All this led to delay and extra cost; hence why a sale might stall or collapse.

The Renters Rights Act (RRA) 2025 will affect the rental market in ways we have not seen since Margaret Thatcher's revolutionary Housing Act 1988. Most of the RRA's eye-catching provisions will come into force on 1 May 2026, and we'll write about that in the next newsletter.

But section 31 (1) of the RRA was brought into force on 27 December 2025 and added a short sentence to the Housing Act 1988 listing tenancies that "cannot be Assured Tenancies", namely "a fixed term tenancy of a term certain of more than 21 years from date of grant of a tenancy". This specific amendment removes the ground rent trap. If your prime long lease has a high ground rent, then it is not (anymore) an Assured Tenancy. So, henceforth we can forget about needing to embark on deeds of variation of the lease during the sale.

Hurrah. Any other good news about leasehold flat sales?

One provision of the Leasehold and Freehold Reform Act 2024 already in force is the abolition of the 2 year rule requiring a leaseholder to have owned their lease for two years before they can serve notice to extend their lease. This was another cause of blockage because the process to extend shorter leases had to begin during a sale. Now, however, a buyer can serve their own notice as soon as they have bought.

Alas, most of the rest of that Act is still in limbo, including: the abolition of marriage value; lease extensions of 990 years (instead of the current 90); a ground rent "cap"; or the statutory valuation rates that will be imposed on landlords as part of a lease extension claim. So, for shorter leases, the uncertainty continues. I expect buyers of short leases will still want to know the likely cost of a lease extension (as the law and prices now stand) and will reduce their bids accordingly.

Commonhold? A draft Commonhold & Leasehold Reform Bill is due to be published soon. This might have effects on the leasehold flat market that will be felt for decades. Personally, I do not think Commonhold will happen seriously before I retire (ahem, 10-ish years) because mortgage lenders will need a heck of a lot of persuading. Converting existing leasehold buildings into Commonhold buildings would take years and years; but may be quicker for share of freehold buildings.

Service Charges and Management? Again, we are waiting for most of the provisions to come into force. Block management is generally heading in a better direction (and RTM companies are more common). But the provisions as to insurance and administration charges, and transparency, are not yet in force.

Fire Safety. So many leasehold sales have been affected by the (utterly necessary; but hastily drafted) Building Safety Act regime introduced and since re-developed after the Grenfell tragedy. The situation is settling down but, still, some sellers have not prepared their paperwork, and this slows down transactions.

The circumstances are improving for long leaseholders and for buyers of long leases, and more improvements are coming, but my message is the same as always. Leasehold flats are fiendishly complex, and it is imperative you get your legal paperwork in order before you start accepting or making offers. If you are selling, allow a good two to four weeks to get a really good legal pack as ready as it can be. If you are buying, let us run a rule over the brochure, the title and the lease, and point you to the questions to ask the agent (which will test how prepared the seller is) before you get too engaged in the purchase. Here's to a booming 2026!

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