If you own a flat in London, the difference between a freehold and a leasehold interest is not academic: it directly affects what your property is worth, how easy it is to mortgage and sell, and what you might pay to extend your lease. With the Leasehold and Freehold Reform Act 2024 on the statute book and further reform being phased in and consulted on through 2025 and 2026, leasehold valuation is changing. This guide explains how surveyors value freehold and leasehold interests, what the reforms are likely to mean in practice, and when you should instruct an RICS Registered Valuer.
Freehold vs Leasehold: What Is Actually Being Valued?
A freehold is outright ownership of the property and the land it stands on, indefinitely. Valuing a freehold house is comparatively straightforward: the valuer looks at comparable sales, condition, location and any legal constraints, and arrives at an open market value.
A leasehold is different. The leaseholder owns the right to occupy the property for the remaining term of the lease, subject to ground rent and the other terms of that lease. What is being valued is a wasting asset: a bundle of rights that diminishes as the lease runs down. The freeholder, meanwhile, holds a separate interest in the same building, the right to receive ground rent during the term and to take the property back (the reversion) when the lease expires.
So for any leasehold flat there are at least two interests to value, and they interact. The shorter the lease, the less the leasehold interest is worth and the more valuable the freeholder’s reversion becomes. A freehold valuation surveyor deals with both sides of this equation, whether acting for a leaseholder extending a lease, a group of flat owners buying their freehold through collective enfranchisement, or a freeholder assessing an offer.
How Lease Length Affects Value and Mortgageability
The general principle is simple: the shorter the lease, the less the flat is worth relative to an equivalent long-lease or share-of-freehold flat. The effect is gentle while the lease is long and accelerates as the term shortens. Historically, the 80-year mark has been a critical threshold, because under the current law extending a lease with fewer than 80 years remaining brings “marriage value” into the premium calculation, making the extension noticeably more expensive. Valuers use graphs of relativity, which chart how leasehold value falls against lease length, to quantify the discount for any given term.
Mortgageability compounds the problem. Lenders each set their own minimum acceptable lease lengths, usually expressed as a minimum unexpired term at the point of purchase or at the end of the mortgage. There is no single statutory threshold that applies across the market in 2026; criteria vary from lender to lender and change over time. What is consistent is the direction: as a lease shortens, the pool of willing lenders shrinks, and a flat that cannot be mortgaged can generally only be sold to cash buyers, at a discount. If you are buying or selling a flat with a shortening lease, checking the position early, with your broker and with a valuer, is essential.
The Leasehold and Freehold Reform Act 2024 and What Comes Next
The Leasehold and Freehold Reform Act 2024 marked the biggest shake-up of enfranchisement law in a generation. It received Royal Assent in 2024, but most of its valuation provisions do not take effect automatically: they are being brought into force in stages, with secondary legislation and consultation determining the detail. As of 2026, surveyors are valuing in a transitional landscape, applying the current law while advising clients on what the reforms are likely to change. The key strands are:
- Longer standard lease extensions. The Act provides for a standard extension of 990 years for both houses and flats, replacing the shorter statutory extensions available under the previous regime.
- Removal of the two-year ownership requirement. Leaseholders no longer need to have owned their flat for two years before claiming a statutory lease extension.
- Abolition of marriage value. The Act provides for marriage value to be removed from premium calculations, which would principally benefit owners of leases already below 80 years. This provision has not yet been brought into force, and it has been the subject of legal challenge by freeholder interests.
- Standardised deferment and capitalisation rates. Rather than being argued case by case, the rates used to value the freeholder’s reversion and ground rent income are to be prescribed. The rates themselves will be set through secondary legislation and have been the subject of government consultation; they are not yet fixed.
- Ground rent restrictions. The Act provides for ground rent to be capped in enfranchisement calculations, and wider restrictions on ground rents have been consulted on. New long residential leases have already been restricted to a peppercorn ground rent under the Leasehold Reform (Ground Rent) Act 2022.
No firm commencement dates have been fixed for the outstanding valuation provisions, and anyone quoting precise future rates or dates is guessing. The practical position for 2026 is that premiums are still assessed under the existing valuation framework, but every sensible negotiation now takes place in the shadow of the reforms.
What This Means for Lease Extension Premiums
The premium for a statutory lease extension is built from the freeholder’s losses: the ground rent income given up, the deferral of the reversion for a further 990 years, and, for leases under 80 years under the current rules, a share of marriage value. Each element depends on valuation judgements, relativity, deferment rate, capitalisation rate, that the reforms will eventually standardise or remove.
This creates genuine strategic questions. A leaseholder with 82 years left may want to act before the lease falls below 80 and marriage value bites under current law. A leaseholder already at 70 years faces a harder judgement: extend now under known rules, or wait for provisions that may reduce the premium but have no confirmed commencement date, while the lease keeps shortening and any sale or remortgage remains constrained in the meantime. There is no universal right answer; it depends on the lease terms, the ground rent, your plans and your appetite for uncertainty. A valuer can model the premium under the current rules and explain how the reforms could change it. For a fuller breakdown of how premiums are built up, see our guide to the cost of a lease extension.
Absent Freeholders
Some leaseholders discover that their freeholder cannot be found: the company has been dissolved, or the individual has died or disappeared. An absent freeholder does not prevent you extending your lease or buying the freehold, but it changes the route. Where the landlord cannot be traced despite proper efforts, the leaseholder can apply to the court, with the premium determined by the First-tier Tribunal (Property Chamber) on valuation evidence and paid into court rather than to the missing landlord.
Valuation evidence carries particular weight in these cases because there is no opposing party to negotiate with: the tribunal relies on the valuer’s report to fix the premium. If you are dealing with an absent freeholder, take advice from both a solicitor experienced in enfranchisement and a valuer familiar with tribunal work before starting the process.
When to Instruct an RICS Registered Valuer
Not every property question needs a formal valuation, but some situations demand one carried out by an RICS Registered Valuer, a surveyor specifically accredited and monitored by RICS for valuation work, reporting under the RICS Valuation, Global Standards (the Red Book). You should instruct one when:
- Extending your lease or buying your freehold, to assess the premium before you serve a notice or respond to a counter-offer, and to negotiate with the freeholder’s valuer.
- Buying or selling a short-lease flat, where the lease length discount and the cost of a future extension must both be priced in.
- Dealing with an absent freeholder, where the tribunal will rely on formal valuation evidence.
- Formal purposes such as probate, capital gains tax, matrimonial proceedings, shared ownership staircasing or company accounts, where a Red Book valuation is required.
A Red Book valuation is independent, evidence-based and defensible, which matters when the figure will be tested by HMRC, a tribunal, a court or an opposing valuer. You can read more about our RICS valuations and the purposes they cover.
Frequently Asked Questions
Is a freehold always worth more than a leasehold?
For the same physical property, a freehold or very long leasehold interest is generally worth more than a short leasehold interest, because the owner is not paying ground rent or facing the cost of extending. But a long lease (say 150 years or more) with a peppercorn ground rent is usually worth much the same as a share of freehold in practice. The discount only becomes significant as the lease shortens.
Should I wait for the 2024 Act reforms before extending my lease?
It depends on your circumstances. The provisions abolishing marriage value and prescribing valuation rates were not yet in force at the time of writing, and no commencement date had been confirmed. Waiting could reduce your premium, but your lease shortens in the meantime, and selling or remortgaging with a short lease is harder. Take advice based on your actual lease length, ground rent and plans rather than a general rule.
What does a lease extension valuation involve?
The valuer inspects the flat, reviews the lease (term, ground rent provisions and any unusual clauses), researches comparable sales and then calculates the premium range under the statutory formula, typically a best-case, likely and worst-case figure. That report becomes the basis for your offer and the subsequent negotiation with the freeholder’s valuer.
Get Advice From an RICS Registered Valuer
Notting Hill Surveyors’ RICS Registered Valuers carry out lease extension, enfranchisement and freehold valuations across London, and can advise you on how the current reforms affect your position. To discuss your lease or arrange a valuation, request your free quote through our contact form.
What is marriage value?
Marriage value is the additional value released when a short lease (under 80 years) is extended or the freehold is purchased – the combined value of the extended interest exceeds the sum of the separate interests, and under the current statutory regime that uplift has historically been shared with the landlord in the premium. Reform legislation is intended to abolish marriage value from lease extension premiums, which is why timing matters so much for owners of shorter leases. A lease extension valuation from an RICS Registered Valuer will show what the premium looks like for your flat under the current rules.