Government to make collective enfranchisement cheaper and easier with 2027 reforms

The UK government recently confirmed that it will proceed with measures under Part 4 of the Leasehold and Freehold Reform Act 2024 (LFRA 2024) that are designed to make service charges clearer and enable enfranchisement by leaseholders.

In its July 2026 response to a consultation on strengthening leaseholder protections over charges and services, it announced plans to restrict leasehold for new flats, cap ground rent at £250, and make enfranchisement more cost-effective.

Leaseholders may start to see consequent changes during 2027, although the reforms will not all take effect on a single date. Even so, leaseholders who are concerned about how their building is managed can begin to consider whether collective enfranchisement would be appropriate, ahead of it potentially becoming more cost-effective to achieve this objective.

In this blog, the expert property litigation team at JMW explains the changes, what they could mean in practice for leaseholders, and how we can help you to take advantage of the new opportunities afforded by the law.

What has the government said about the Leasehold and Freehold Reform Act 2024?

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. Part 4 contains measures intended to increase transparency around service charges, building insurance and other costs, and remove some of the barriers leaseholders currently face when challenging their landlord concerning service charge costs that they are being required to pay.

Following consultation in 2025, the government confirmed on 15 July 2026 that it intends to proceed with the reforms in England, which means introducing secondary legislation to support the relevant measures.

The introduction of these new measures will be phased throughout 2027, with some intended to commence as soon as possible during the year, and others to follow notice periods that will give landlords time to change their systems and processes.

What service charge and ground rent changes are expected from 2027?

A number of reforms are expected to come into force in 2027 that could benefit leaseholders. For example, landlords will be required to provide an annual report giving leaseholders information about their building, including its condition and planned major works. The report will also include a declaration of relevant relationships between the landlord and third parties, such as managing agents.

Leaseholders will also be able to request more information regarding service charges and the building’s management, maintenance, repairs, improvement and insurance, than is presently the case.

Under the new rules, service charge accounts must follow a standardised framework, with prescribed minimum financial and comparative information. They will need to be prepared and signed off by appropriately qualified professionals, with an accountant's statement provided alongside them.

Finally, the government intends to introduce mandatory leasebacks and a cap on annual ground rent of £250, both of which aim to reduce the costs of any enfranchisement and consequently make it easier and cheaper for leaseholders to purchase and control their buildings.

How could the ongoing consultations affect lease extensions and enfranchisement?

Beyond the new measures taking effect next year, two further consultations that are ongoing until October 2026 could have an even bigger impact for leaseholders who are interested in purchasing the freehold to their property. The first consultation concerns the two key valuation rates used when leaseholders buy their freehold, extend their lease or buy out their ground rent under the LFRA 2024. Deferment rates are used to calculate the present value of the freeholder’s right to regain possession of the property at the end of the lease, while capitalisation rates calculate the present value of the ground rent payable under the leases for the remainder of their terms that the freeholder will lose.

These rates will form part of the LFRA 2024’s new standard valuation method and will ultimately determine how much leaseholders will pay in future enfranchisement and lease extension claims in England and Wales.

The general position under LFRA 2024 is that each party will only pay its own legal and surveyor costs when a leaseholder extends a lease or buys a freehold, although there are limited exceptions where leaseholders may still have to contribute to a landlord’s costs (as is the case now). The rationale for the change is unclear, since previously it was considered fair that the landlord’s reasonable costs should be paid by the leaseholder as it was the leaseholder’s action in seeking a lease extension or enfranchisement that caused those costs to be incurred.

The second consultation seeks views on these exceptions, including low-value claims, claims that fail because of something the leaseholder has done or failed to do, and certain collective enfranchisement cases involving leasebacks. Technical barriers to a successful outcome for leaseholders in such transactions may therefore fall away.

What will greater service charge transparency mean for leaseholders?

The practical benefits of the new rules will include both a clearer view of how money is being collected and spent. In particular, access to more information could make it easier to learn what service charge payments are being collected for, and whether increases are unreasonable and could be challenged.

If you have concerns about a demand for a service charge payment, JMW's leaseholder services team can review your lease and explain your rights under it and under relevant legislation. We advise on residential service charge disputes, including undertaking negotiations and Tribunal proceedings in respect of the same where necessary.

How will the 2027 service charge reforms affect collective enfranchisement?

Collective enfranchisement is the process through which qualifying tenants of flats can act together to buy the freehold of their building. Although the Part 4 measures do not change the collective enfranchisement procedure, the changes to costs and the additional information could be useful to leaseholders considering taking control of their building.

A decision to pursue collective enfranchisement may be influenced by how the building is being managed, the level of service charges, planned expenditure, the choice of managing agents or the cost of building insurance.

The new information may help potential buyers to build a clearer picture of:

• Historic and current service charge expenditure.
• Budgeted costs compared with actual spending.
• The landlord’s planned major works and expenditure it intends to incur in the near future.
• Insurance arrangements and pricing.
• Administration and management charges.
• Relevant relationships between the landlord, managing agent and suppliers.

Acquiring the freehold means taking on the landlord's responsibilities, and greater access to information can enable leaseholders to assess what plans the landlord may have to incur costs for the building and how much of those could be charged in service charge costs to the leaseholders that they might wish to avoid by acquiring control by enfranchisement.

Other parts of the LFRA 2024 are due to make separate changes to enfranchisement law, and those reforms have their own commencement arrangements. As such, it is vital to speak to an experienced solicitor for up-to-date guidance on the legal regime when considering collective enfranchisement. Until the relevant provisions roll out, the existing law and the terms of the lease continue to apply, so timing is important in these cases.