Short Answer – Leasehold to commonhold reforms are delayed due to a Human Rights Act Challenge by landlords. Uncertainty about calculation of freeholder compensation and reduction and or abolition of ground rent and ‘marriage value’. No due date for implementation or the case verdict. Uncertainty about the calculations methods continues
Updated 08 July 2026
Introduction to Marriage Value
The Leasehold and Freehold Reform Act 2024 (LFRA 2024) introduced major changes to how leaseholders in England and Wales calculate and pay the premium—the amount due to the freeholder—when acquiring the freehold title through collective enfranchisement or extending a lease.
These reforms aim to make the process fairer, more transparent, and more affordable for leaseholders, while phasing out outdated elements of the leasehold system. Whether that is fair or not remains to be seen, particularly as there are Human Rights Act challenges to the legislation, as the proposals are so onerous to landlords that the change may contravene Article 1 (see below and updates)
The upcoming Commonhold and Leasehold Reform Bill 2026 builds on this by promoting commonhold as the default tenure for new flats and facilitating conversions from leasehold, but the core valuation method for freehold premiums remains rooted in LFRA 2024.
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Under the reformed framework, the premium is calculated as the sum of the freeholder’s compensatable losses, excluding previously contentious elements like marriage value. This shift addresses long-standing criticisms that leaseholders (especially those with leases under 80 years) faced inflated costs due to “hope value” or uplift when combining interests.
Key Changes to the Valuation Method
LFRA 2024 amends the Leasehold Reform, Housing and Urban Development Act 1993 (as amended) to abolish marriage value entirely. Previously, for leases with less than 80 years remaining, leaseholders paid 50% of the marriage value—the additional value created by merging the freehold and leasehold interests. This often added tens of thousands to premiums, particularly in high-value areas like London.
The Act also caps ground rent in valuations at 0.1% of the freehold vacant possession value for the term value calculation. [Editors note: – but will it actually be capped at the rates specified in the CLRA 2026 Bill only £250 for forty years? Will it also reflect costs of complying with legalisation, like Fire Safety issues and the Building Safety Act(s)? There is no clear answer at the moment]
This prevents high or escalating ground rents (common in modern leases) from inflating premiums excessively. The premium currently comprises:
1 Term value — The present value of the freeholder’s lost ground rent income over the remaining lease term.
Ground rent is capped at 0.1% of the freehold value for this purpose. The income stream is capitalised using a government-prescribed capitalisation rate (to be set via secondary legislation after consultation).
2 Reversion value — The present value of the freeholder’s interest when the lease expires (i.e., the deferred freehold value).
This is calculated by deferring the estimated future freehold value back to today using a prescribed deferment rate. The deferment rate reflects risks like maintenance, obsolescence, and market changes.
3 Other compensation — Limited additional losses, such as impacts on management rights, but these are minimal in most cases.
Total premium = Term value + Reversion value + Other compensation (if any)
This “term plus reversion” approach applies to both collective enfranchisement (buildings with multiple flats) and individual lease extensions (typically granting 990 years at peppercorn rent). It simplifies calculations and removes speculative uplifts.
The Judicial Review Challenge on Human Rights Grounds
The valuation reforms faced significant opposition from freeholders, leading to a landmark judicial review. In R (on the application of ARC Time Freehold Income Authorised Fund and others) v Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751 (Admin), decided on 24 October 2025 by the Divisional Court (Lord Justice Holgate and Mr Justice Foxton), six consolidated claims from major freehold owners—including investment funds like ARC Time, estates such as Cadogan and Grosvenor, charitable trusts like John Lyon’s Charity, and others—were dismissed.
The claimants argued that abolishing marriage value, capping ground rent at 0.1%, and removing the freeholder’s right to recover certain costs in enfranchisement claims unlawfully interfered with their property rights under Article 1 of Protocol 1 (A1P1) to the European Convention on Human Rights (peaceful enjoyment of possessions). They sought a declaration of incompatibility under section 4 of the Human Rights Act 1998.
The court acknowledged interference with freeholders’ rights but ruled the measures constituted a legitimate control of use of property, not deprivation. Parliament pursued valid public aims: fairness, affordability, transparency, and simplification for leaseholders. The reforms were proportionate, within Parliament’s wide margin of appreciation, and provided reasonable (though reduced) compensation.
The court rejected claims that the changes lacked justification, imposed excessive burdens, or unfairly targeted charities. All claims were dismissed individually and cumulatively. This robust decision cleared the path for implementation, though some claimants sought permission to appeal to the Court of Appeal (outcomes pending as of February 2026). No other major judicial reviews on these valuation provisions have succeeded.
Link – More detailed article on Human Rights and Property law
Implications for the Commonhold and Leasehold Reform Bill 2026
As of February 2026, the draft Commonhold and Leasehold Reform Bill focuses on expanding commonhold—where unit-holders own their flats outright and jointly manage the building—while addressing ground rent issues (capping at £250/year for existing leases, transitioning to peppercorn after 40 years). It streamlines conversions to commonhold, often requiring enfranchisement first.
The Bill does not introduce a new premium calculation formula; it relies on LFRA 2024’s method. For conversions, extinguished interests (e.g., freeholder rights) may involve compensation via regulations, but the core enfranchisement premium follows the term-plus-reversion model.
Practical Considerations and Next Steps
Prescribed rates (capitalisation and deferment) await government consultation and secondary legislation—delayed partly by the judicial review. Until set, parties negotiate based on the reformed framework or pre-2024 methods. Leaseholders with short leases benefit most from marriage value abolition, potentially saving significant sums.
Those with high ground rents gain from the 0.1% cap. Professional advice from surveyors (e.g., RICS members) and solicitors is crucial, as premiums depend on property-specific factors: freehold value, lease length, location, and rates once prescribed. These reforms mark a collective shift toward “fairness” in leasehold, reducing “feudal” elements and paving the way for commonhold. Your view of fairness may differ depending on whether you’re a landlord or a tenant. The current arrangements create a compromise that inflates tensions and satisfied neither side.
The High Court’s rejection of human rights claims brings into sharp focus the question about ‘what is fair’ – is collective ownership simply an oxymoron which it contentious by design, or will is create the final utopian solution to this most egregious problem?
David Buchanan is a property litigator, conveyancer and private client lawyer with 20 years experience in the field.
Click here for the latest update on the Human Rights Act challenge to these government reforms – and how you can use AI to get the latest info.
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David Buchanan is a consultant solicitor with Taylor Rose specialising in contentious and non contentious land law and chancery law.
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Table of Contents – Marriage Value Abolition
FAQ: Marriage Value Abolition & Leasehold Reform (as of July 2026)
Q1: What is “marriage value”?
Marriage value is the additional uplift in property value created when the leasehold and freehold interests are combined into single ownership. Previously, leaseholders with under 80 years remaining on their lease often had to pay 50% of this value to the freeholder — sometimes adding tens of thousands of pounds to the premium.
Q2: Has marriage value been abolished?
The Leasehold and Freehold Reform Act 2024 introduced the abolition of marriage value in premium calculations for lease extensions and collective enfranchisement. However, full implementation is still delayed due to ongoing legal challenges and awaiting secondary legislation (such as prescribed rates).
Q3: How would the new premium be calculated?
Under the 2024 Act reforms (once active):
- Term value — Present value of lost ground rent (capped at 0.1% of freehold value).
- Reversion value — Present value of the freeholder’s interest when the lease expires.
- Limited other compensation.
Marriage value would no longer be added.
Q4: What about ground rent changes?
The 2024 Act caps ground rent at 0.1% of the freehold value for valuation purposes. The draft Commonhold and Leasehold Reform Bill 2026 proposes further caps (e.g. £250 per year for existing leases, moving to peppercorn after 40 years), but this Bill is not yet law and remains in draft form.
Q5: Are these changes in force?
Not fully. The 2024 Act passed but key parts (including new valuation rules and prescribed rates) have not yet commenced due to judicial review challenges on Human Rights grounds and delays in secondary legislation. A major High Court challenge was dismissed in late 2025, but uncertainty remains and there is no confirmed implementation date.
Q6: Who stands to benefit?
Leaseholders with shorter leases (especially under 80 years) and those with high/escalating ground rents would benefit most once the reforms are implemented, potentially saving significant sums on lease extensions or freehold purchases.
Bottom line:
While the direction of travel is toward cheaper lease extensions by removing marriage value, the reforms are not yet fully in force. The 2026 Commonhold Bill is still draft and not law. Always seek up-to-date specialist legal and valuation advice, as the situation remains fluid.