Lease length is one of the most significant “hidden” drivers of value for leasehold investments, particularly in markets like London, where flats are prevalent. A short lease can affect the sale price, refinancing options, buyer demand, and the cost of rectifying issues later. At the same time, landlords are also navigating a separate (but equally important) wave of change in the private rented sector under the Renters’ Rights Act 2025.
In this guide, we will cover:
- What a lease extension is and why it matters to investment performance
- What’s already changed on leasehold rules
- What’s changing next (including 990-year extensions)
and the key rental reforms landlords should factor into 2026 planning.
Related: UK Government Autumn Budget 2025: What it means for Scottish Landlords
What Is a Leasehold Property?
Leasehold means you own the property for a fixed term, but not the land it sits on. The land and communal parts of the building are typically owned by a freeholder.
Your lease sets out how long you can own the property for, the rules you must follow (such as restrictions on alterations, subletting or pets), and the costs linked to the building’s management and upkeep. These costs commonly include ground rent, service charges, and maintenance or sinking fund contributions.
For landlords, these ongoing costs directly affect net yield, while the remaining lease term affects exit value and financeability.
Why Lease Length Matters for Landlords and Investors
A lease is a wasting asset: every year that passes reduces its term. From an investment perspective, lease length impacts:
- Resale Value and Buyer Pool: Shorter leases can reduce demand and invite price renegotiation.
- Mortgage and Remortgage Options: A short lease can narrow lender choice and complicate refinancing.
- Cost of Fixing The Problem: Premiums tend to rise as terms get shorter, often sharply around key thresholds.
Related: Possession grounds and the Renters’ Rights Act: what landlords need to know from May 2026
What Has Already Changed in Leasehold Rules?
The Leasehold Reform (Ground Rent) Act 2022 restricts ground rent in most new long residential leases in England and Wales to a peppercorn (effectively £0).
Investor takeaway: New-build leasehold purchases may have more predictable outgoings on ground rent, but service charges and building management still need careful due diligence.
What’s Changing Next: Longer Extensions And Clearer Costs
The Leasehold and Freehold Reform Act 2024 became law in May 2024 and is designed to make it easier and cheaper to extend leases or buy freeholds, including introducing 990-year extensions (with changes phased in). Leasehold Advisory Service (LEASE) also provides practical guidance.
Investor takeaway: Expect longer lease security and clearer costs, which can affect how you price short leases and plan your exit.
Related: Landlords Guide to Safety and Tax
Marriage Value: Why The 80-Year Mark Still Matters
“Marriage value” is the extra value created when a lease is extended. Traditionally, extension costs often rise sharply once a lease drops below 80 years, so landlords should treat approaching 80 years as a key risk point and get a specialist valuation early. For the latest position on reforms and timing, refer to the UK Parliament Commons Library briefing.
The Renters’ Rights Act 2025 doesn’t change lease extensions but does affect leasehold landlords from May 2026, ending Section 21 and moving to periodic tenancies, while also fixing a historic long-lease issue. Landlords should flag leases nearing 80 years, review extension costs and service charge risk, and ensure tenancy processes, referencing and repairs are robust.
Extending A Lease: The Routes Landlords Should Know
- Statutory lease extension: A formal, legally structured process (if you meet eligibility rules). Always take legal advice, as reforms are being phased in.
- Informal (negotiated) extension: Agreed directly with the freeholder and can be quicker, but terms vary and may include ongoing ground rent.
- Buying the freehold (collective enfranchisement): In some blocks, leaseholders can buy the freehold together. Reforms aim to make this easier/cheaper, but it’s still a specialist legal process.
Key Leasehold Checks
Before you commit to a leasehold purchase, treat these as essentials:
- Check The Remaining Lease Term (And how it affects your refinance and exit plan)
- Review Ground Rent Terms (Including any review clauses)
- Assess Service Charge History (Ideally, several years where available)
- Ask About Major Works (And any planned increases or Section 20 notices)
- Evaluate Managing Agent Performance (Because poor management affects costs and tenant experience)
This is where headline yield can diverge sharply from real yield.
The Bottom Line For Landlords
For landlords, lease length isn’t just a legal detail, it’s a core investment metric that shapes value, finance options and exit strategy. If you’re holding (or buying) leasehold stock, the most practical next step is to review remaining terms across your portfolio, identify any leases approaching 80 years, and take early advice on extension costs and block-level outgoings. If you’d like tailored guidance, speak to your local Northwood team for a leasehold-focused valuation and landlord planning conversation.
