Open consultation

Leasehold enfranchisement process costs

Published 15 July 2026

Applies to England and Wales

Scope of the consultation

The Leasehold and Freehold Reform Act 2024 (LFRA 2024) provides a new rule that all parties to a leaseholder’s claim to extend their lease, buy their freehold or buy out their ground rent liability should bear their own non-litigation costs (legal and valuation costs, also referred to as “process costs”), unless one of three limited exceptions applies.

This consultation seeks views on implementing these exceptions (under which leaseholders will still have to contribute to their landlord’s process costs) in regulations under powers introduced by the LFRA 2024. In particular it seeks views on the setting of “prescribed amounts”, which will be the maximum amounts payable by leaseholders towards their landlord’s process costs under each exception.

This consultation also seeks views on a proposed fourth exception for certain third parties to leases, who may face insolvency risks if they are unable to recover process costs incurred as a result of leaseholder claims.

Geographical scope

These proposals relate to the exercise of powers introduced by the LFRA 2024 allowing the Secretary of State to implement the process costs exceptions in England. Welsh Ministers have corresponding powers to implement these exceptions in Wales and will confirm the approach for Wales in due course. If you are based in Wales, you may respond to this consultation. Please indicate if you are responding in relation to property in Wales when completing the ‘About you’ questions.

Impact assessment

An impact assessment was published during passage of the Leasehold and Freehold Reform Act 2024, which considered the anticipated impacts of the process costs measures provided for in the primary legislation. This consultation is intended to gather evidence to inform assessment of the impacts of the detailed secondary legislation. Any regulations taken forward following consultation will be supported by proportionate impact analysis.  

Basic information

Body responsible for the consultation

The Ministry of Housing, Communities and Local Government.

Duration

This consultation will run for 10 weeks and will close at 11:59pm on 23 September 2026.

Enquiries

For any enquiries about the consultation please contact: LFRAprocesscostsexceptions@communities.gov.uk

How to respond

You may respond by completing an online survey at Citizen Space:

Alternatively, you can email your response to the questions in this consultation to: LFRAprocesscostsexceptions@communities.gov.uk

When you respond it would be very useful if you confirm whether you are responding as an individual or submitting an official response on behalf of an organisation, and if so, include the name of the organisation and your position.

Glossary

Collective enfranchisement	Statutory right (under the LRHUDA 1993) of leaseholders to collectively buy the freehold of a building / block of flats.
Enfranchisement rights / claims	Term used in this consultation to refer to statutory rights / claims to purchase the freehold, extend a lease or buy out ground rent liabilities. We note that in other contexts, “enfranchisement” usually has a narrower meaning and refers to freehold acquisitions only.
Failed claim	An enfranchisement claim that fails because it is withdrawn (or deemed withdrawn) by the leaseholder(s), set aside by the court or the Tribunal, or due to an act or omission of the leaseholder(s). A claim may be “deemed” (considered) withdrawn if, for example, the leaseholder has not formally withdrawn it but has stopped engaging with it.
Freeholder	The owner of a property and the land on which it is erected, in perpetuity, as shown in the freehold title. (See also “landlord”.)
Freehold ownership	Ownership that lasts forever and gives extensive control.
Ground rent	A regular payment which a leaseholder is required by their lease to pay to the landlord. Ground rents can also be nil financial value, i.e. a peppercorn.
Ground rent buy out	Statutory right (under the LFRA 2024) of certain leaseholders to “buy out” their ground rent liabilities by varying their lease to replace the ground rent with a peppercorn rent.
Intermediate lease	A lease that sits between the freehold and the leaseholder’s lease (sometimes also called a head lease). The leaseholder under an intermediate lease is also the landlord of the lease below them (and referred to as an “intermediate landlord”).
Landlord (see also “Freeholder”)	A person who owns an interest in property out of which a lease has been granted. A landlord may be either the freeholder of the property or hold a leasehold interest in whole or part of the property.
Law Commission	Independent organisation that primarily works on projects to make areas of law more up to date, simple and fair, usually under terms of reference agreed with the government.
Lease (long lease)	A long lease is a legal document granting a leaseholder a right to occupy the property for a specified period of time. The lease sets out the rights and obligations of the landlord and leaseholder. A long lease is one originally granted for a term exceeding 21 years.
Lease extension	Statutory process of extending the length of a lease (and reducing the ground rent) under the LRA 1967 for leasehold houses and the LRHUDA 1993 for leasehold flats. The LFRA 2024 will increase the terms granted for lease extensions for both houses and flats to 990 years, up from 50 years for houses and 90 years for flats.
Leaseback	Arrangement under which the outgoing freeholder in a collective enfranchisement is granted a long lease (usually for 999 years at a peppercorn rent) over specific units in the building, whether residential or commercial. This results in the freeholder retaining an interest in the property after the sale of the freehold to the leaseholders and usually reduces the price payable for the freehold.
Leaseback election	Leaseholders’ exercise of their new right (introduced by the LFRA 2024) to require the freeholder to accept a leaseback or leasebacks in a collective enfranchisement.
Leasehold and Freehold Reform Act 2024 (LFRA 2024)	Primary legislation reforming the enfranchisement system.
Leasehold legislation	The LRA 1967, the LRHUDA 1993 and the LFRA 2024.
Leasehold Reform Act 1967 (LRA 1967)	Primary legislation providing enfranchisement rights in relation to leasehold houses.
Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993)	Primary legislation providing enfranchisement rights in relation to leasehold flats.
Leaseholder	Person who owns property on a long lease. In leasehold legislation, a leaseholder is typically termed as a “tenant”.
Low value claim	Enfranchisement claims in relation to which the premium does not exceed a prescribed amount set by regulations.
Non-litigation costs	Professional fees in relation to the exercise of enfranchisement rights, excluding litigation costs e.g., conveyancing and valuation costs. Referred to as “process costs” in this consultation.
Peppercorn rent	A rent with zero financial value. Lease extensions under the LFRA 2024 will only require a peppercorn rent.
Premium (or price paid)	The lump sum paid to exercise enfranchisement rights under the LFRA 2024, excluding costs.
Prescribed amount	An amount prescribed by regulations, which will determine a leaseholder’s contribution to the landlord’s process costs under a process costs exception.
Process costs	See “non-litigation costs”.
Process costs exception	One of the exceptions to the new rule that each party bears their own costs in an enfranchisement claim. The three exceptions introduced by the LFRA 2024 relate to low value claims, failed claims and to leaseback elections in collective enfranchisement claims. This consultation seeks views on the proposed approach to implementing these exceptions, and on a proposed fourth exception for third parties to leases.
Resident led management organisation	An organisation (usually a company) through which leaseholders are responsible for managing their building themselves (rather than the building being managed by the landlord). The leaseholders are usually shareholders of a company which delivers or procures services on behalf of the landlord under the terms of the lease. For example, a residents’ management company.
Service charges	Financial contributions for the costs of the day-to-day management and maintenance of leasehold properties, usually payable to a landlord. They cover expenditure such as general maintenance, building insurance, utility costs and upkeep of communal areas, as well as contributions to major works, such as repairing a roof or replacing a lift. Most leaseholders pay variable service charges (which fluctuate based on the actual expenses incurred), but some leaseholders have fixed service charges.
Third parties	References to third parties in this consultation are to parties to a lease who are not the landlord or the leaseholder.
Tribunal	First-tier Tribunal (Property Chamber) in England, or a Leasehold Valuation Tribunal in Wales. On appeal, the Upper Tribunal (Lands Chamber).
Valuation	The process of calculating the price payable / premium for enfranchisement claims.

About you questions

Question 1

What is your name

Question 2

What is your email address

Question 3

Are you responding on behalf of an organisation? [Yes/No]

If “yes” what is the name of the organisation? [Free text]

Organisations

Question 4

If you are responding on behalf of an organisation, which of the following best describes you:

• leaseholder representation group
• residents’ management company/Right to Manage company
• share of freehold leaseholders, who own their block of flats
• freeholder/landlord (including intermediate landlord)
• freeholder/landlord representation group
• valuer
• law firm
• investor
• developer
• retirement sector developer
• housing association
• local authority
• professional body
• government body
• trade association
• charity freeholder
• other (please specify)

Individuals

Question 5

If you are responding as an individual, are you:

• a leaseholder in a flat
• a leaseholder in a leasehold house
• a freeholder/landlord
• a legal representative
• a valuer
• other (please specify)

Leaseholders

Question 6

If you are a leaseholder, where is your property located?

• North East England
• North West England
• Yorkshire and the Humber
• East Midlands
• West Midlands
• East of England
• London (Greater London)
• London (Prime Central)
• South East England
• South West England
• Wales
• other (please specify)

Law firms/Valuers

Question 7

If you are a law firm or Valuer, please describe your organisation’s purpose in relation to this consultation.

• mainly provide advice to leaseholders 
• mainly provide advice to freeholders/investors
• provide advice to both leaseholders and freeholders/investors
• other (please specify)

Freeholders/landlords

Question 8

If you are a freeholder (landlord), in what region are the majority of properties in your portfolio based?

• North East England
• North West England
• Yorkshire and the Humber
• East Midlands
• West Midlands
• East of England
• London (Greater London)
• London (Prime Central)
• South East England
• South West England
• Wales
• other 

Question 9

If you are a freeholder or intermediate landlord, what is the size of your portfolio in £million?

• under £4.9 million
• £5–£24.9 million
• £25–£99.9 million
• over £100 million

Introduction

1. In England and Wales, residential property has almost always been owned on either a freehold or leasehold basis. Owning a property on a “freehold” basis means that the purchaser has ownership which lasts forever, and they have extensive control of the property. Purchasing a leasehold property is different. The purchaser i.e. the leaseholder, acquires the right to live in the property on a time-limited basis, for example 99 years, and control over the property is often constrained through the terms set out in the lease.

2. As the length of a lease reduces over time, the assumption is that the property will revert to the landlord at the end of the lease. At some point in time, leaseholders must therefore extend their lease or buy the freehold to retain ownership of the property (processes described collectively in this consultation as “enfranchisement”). Leaseholders have existing statutory enfranchisement rights under the Leasehold Reform Act 1967 (LRA 1967) and the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993).

3. The LFRA 2024 will, when it is brought fully into force, make several significant changes to the current statutory enfranchisement processes through which leaseholders can buy the freehold of their property or extend their lease.

Removal of leaseholders’ liability for their landlord’s process costs

4. One of the key changes made by the LFRA 2024, which this consultation relates to, is a new requirement that each party should pay their own “process” costs (i.e. legal and valuation costs) in enfranchisement claims, subject to a small number of exceptions. This is expected to save leaseholders considerable sums.

5. Under current law, leaseholders who exercise enfranchisement rights must pay the landlord’s reasonable process costs, in addition to their own, as long as those costs fall into certain categories set out in legislation.^{[footnote 1]} The Law Commission considered this arrangement as part of their work on leasehold reform^{[footnote 2]}. They noted the contrast with residential property sales where each party pays their own costs and recommended that, as long as the government adopts a valuation mechanism for enfranchisement claims that is a broadly market-value based approach, landlords should in most cases be required to pay their own process costs.^{[footnote 3]}

6. When brought fully into force, the LFRA 2024 will implement this recommendation by removing leaseholders’ obligation to pay the landlord’s process costs in enfranchisement claims, unless an exception applies^{[footnote 4]}. This will make it cheaper for leaseholders to extend their lease or buy the freehold, contributing to the rebalancing of the relationship between leaseholders and landlords. It will also simplify the process of lease extension and enfranchisement by encouraging greater efficiency in the conduct of transactions and reduce the risk of leaseholders being deterred from claiming a lease extension or enfranchising because of uncertainty over costs.

7. A new right for leaseholders with more than 150 years remaining on their lease to buy out their ground rent (i.e. pay a premium to reduce the ground rent to a peppercorn rent) is also introduced by the LFRA 2024^{[footnote 5]}. In common with freehold purchases and lease extensions the leaseholder and landlord will be required to pay their own process costs, unless an exception applies.^{[footnote 6]}

8. The LFRA 2024 has already ended leaseholders’ obligation to pay the landlord’s process costs when making a right to manage claim (i.e. taking over the management of their building from the landlord).^{[footnote 7]}

9. The Divisional Court recently considered the lawfulness of the LFRA 2024’s provisions on the amended valuation scheme, and on removing leaseholders’ obligation to pay the landlord’s process costs, in six judicial review claims.^{[footnote 8]} The Court dismissed the claims, finding that the provisions are compliant with Article 1 of the First Protocol to the European Convention on Human Rights. The Divisional Court’s judgment is currently subject to appeal.

The process costs exceptions

10. The LFRA 2024 provides for 3 exceptions to the new rule that parties pay their own costs in enfranchisement claims, based on the Law Commission’s recommendations^{[footnote 9]} and under which leaseholders will still be required to contribute to a landlord’s reasonable process costs. The exceptions are as follows (and explained in more detail at paragraphs 17 to 26 below):

a. Low value claims - The Law Commission recommended an exception for low value claims, on the basis that it would be potentially unfair to landlords if the premium that they received for an enfranchisement claim was insufficient to cover the process costs that they reasonably incurred in progressing the transaction^{[footnote 10]}.

b. Failed claims - In some cases, an enfranchisement claim may fail because it is withdrawn (or deemed withdrawn) by the leaseholder, set aside by the court or the Tribunal, or otherwise fails as a result of an act or omission of the leaseholder^{[footnote 11]}. In such a case the landlord may have been obliged to incur process costs (which could be significant) and yet received no premium to offset them. Again, the Law Commission recommended an exception for failed claims on the basis that this could be unfair to landlords^{[footnote 12]}.

c. Leasebacks - In a claim for collective enfranchisement, leaseholders will be able to require the landlord to take a long leaseback of the non-participating parts of the building, such as commercial premises or units where the leaseholder has chosen not to participate in the enfranchisement (we refer to this as a ”leaseback election”)^{[footnote 13]}. In such a case, the election will reduce the premium payable by the leaseholders (because they will not be obliged to purchase the non-participating units) while causing the landlord to incur process costs in preparing and agreeing the form of leaseback. The Law Commission noted that it is right for the leaseholders to contribute to the additional process costs incurred by the landlord as a result of their leaseback election^{[footnote 14]}.

11. The government intends to introduce a fourth exception, not currently in the LFRA 2024, to enable a limited category of third parties to leases, such as resident led management organisations, to claim their reasonable process costs incurred in an enfranchisement claim, from the leaseholder or leaseholders making the claim. It is intended to be a narrow exception, targeting third parties to leases that may face insolvency risks if they are not able to recover their reasonable process costs (e.g. where they receive no share of the premium, have few or no income sources and do not have any connection or contract with the landlord). Paragraphs 65 to 68 of this consultation provide further detail on this proposed exception.

The subject of this consultation

12. Several provisions in the LFRA 2024 have already come into force. However, the provisions relating to process costs require the government to make regulations prescribing the amount that leaseholders must contribute to the landlord’s reasonable process costs where an exception applies. This is necessary before the rule that each party to an enfranchisement claim must pay their own costs can be brought into effect.

13. The prescribed amount can be different for each of the process costs exceptions and for each type of claim. The government wishes to gather evidence of the costs that landlords and leaseholders currently experience in progressing enfranchisement claims. Ground rent buy out is a new right for leaseholders whose lease has more than 150 years to run, and the government wishes to gather evidence of the likely process costs that leaseholders and landlord expect to incur in such transactions.

14. A key objective of this consultation is to gather evidence on the level of process costs actually incurred by both landlords and leaseholders in recent enfranchisement claims, with sufficient detail to identify the nature of the transaction (whether statutory or non-statutory), together with factors such as location, property value, seniority of professional advisers and any complicating features.

15. This consultation also seeks views on policy options for the implementation of the process costs exceptions. Proposed prescribed amounts are provided as a starting point and will be reviewed in light of the evidence gathered through this consultation.

Key terminology

16. Technical terms are defined in the glossary. However, it is worth noting the following key terms used throughout this consultation:

• “Process costs” – These are the costs incurred by the parties other than in connection with a court or tribunal hearing, e.g. conveyancing and valuation costs. They are referred to as “non-litigation” costs in leasehold legislation and by the Law Commission.
• “Process costs exception” – This refers to any of the three exceptions to the new rule that each party bears their own process costs, described at paragraph 10 above, and the proposed new exception for third parties described at paragraph 11 above.
• “Prescribed amount” – This refers to an amount to be prescribed by the government in regulations, under powers introduced by the LFRA 2024, for the purpose of determining how much a leaseholder is required to contribute towards a landlord’s process costs where a process costs exception applies.
• “Lease extension” – The process of extending a lease of a house (under the LRA 1967) or flat (under the LRHUDA 1993).
• “Collective enfranchisement” – The process by which leaseholders can collectively buy the freehold of their building under the LRHUDA 1993.
• “Ground rent buy out” – The process by which leaseholders with more than 150 years remaining on their lease can “buy out” their ground rent liabilities (i.e. pay a premium to the landlord and vary the lease to reduce the ground rent to a peppercorn) under the LFRA 2024.
• “Enfranchisement claims” – This consultation uses this term to refer collectively to claims by leaseholders to extend a lease of a house or flat, buy the freehold of a leasehold house, collectively buy the freehold of a block of flats and buy out their ground rent liabilities. We note that in other contexts, “enfranchisement” has a narrower meaning and refers to freehold acquisitions only.

Explaining the process costs exceptions

The low value claims exception

17. The low value claims exception will apply in relation to:

a. lease extensions of houses and buying the freehold of a leasehold house^{[footnote 15]};

b. lease extensions of flats and collective enfranchisements (buying the freehold of a block of flats)^{[footnote 16]}; and

c. ground rent buy outs.^{[footnote 17]}

18. Under this exception, where the price payable to buy the freehold, obtain a lease extension or buy out the ground rent (i.e. the premium) is below a prescribed amount (which the government will set in regulations), the leaseholders may be required to pay the difference between the premium payable and the lower of the landlord’s reasonable costs and the prescribed amount. In other words, the leaseholder will contribute to the landlord’s process costs to the extent that these costs exceed the premium but fall below the prescribed amount.

19. Paragraphs 47 and 50 of this consultation illustrate how this exception will operate, by providing examples of how a leaseholder’s contribution to the landlord’s process costs would be calculated in a low value lease extension and in a low value collective enfranchisement.

20. The Law Commission noted that “the prescribed sum would in effect become the minimum sum payable to enfranchise. For this reason, it will be important for the prescribed sum to be set at a level that acknowledges that landlords can face non-litigation costs that exceed any premium payable in low-value claims, but also recognises that leaseholders may find it difficult or unduly costly to challenge a claim to the prescribed sum if made”.^{[footnote 18]}

The failed claim exception

21. The failed claim exception will apply in cases where an enfranchisement claim is withdrawn or deemed withdrawn by the leaseholder, set aside by the court or the Tribunal or otherwise fails due to the act or omission of the leaseholder(s). In these circumstances, landlords could have incurred process costs but received no premium.

22. The failed claim exception will apply to:

a. lease extensions of houses and buying the freehold of a leasehold house^{[footnote 19]};

b. lease extensions of flats and collective enfranchisements (buying the freehold of a block of flats)^{[footnote 20]}; and

c. ground rent buy outs.^{[footnote 21]}

23. The Law Commission recommended that, in the event of a failed enfranchisement claim, leaseholders should pay a “small, fixed sum” to landlords in recognition of the fact that the landlord will have incurred process costs but not received a premium. The Law Commission further recommended that the “small, fixed sum” should not be related to the stage at which the transaction failed.^{[footnote 22]}

The leaseback exception

24. The leaseback exception^{[footnote 23]} will apply in relation to collective enfranchisements only, where the leaseholders exercise their new right to require the landlord to take long (999 years) leases of certain flats/units in their block (a leaseback election).^{[footnote 24]} This may relate to commercial units that form part of a mixed-use building or residential units that are not participating in the collective enfranchisement.

25. The effect of such an election is to reduce the overall price that the leaseholders in a collective enfranchisement must pay to acquire the freehold of the building, with the landlord retaining a long leasehold interest in those parts of the building that are the subject of the leaseholders’ election.

26. Given the financial benefit to leaseholders of making leaseback elections, the Law Commission recommended that a landlord’s reasonable process costs in taking the leasebacks should be met by the leaseholders.

The government’s aims in implementing the process costs exceptions

27. A key aim of the government’s LFRA 2024 enfranchisement reforms is to make it cheaper and easier for existing leaseholders of houses and flats to extend their lease or buy their freehold. Once commenced, the LFRA 2024 process costs measures will contribute to that aim by reducing the cost of enfranchisement claims for leaseholders and removing one of the barriers currently deterring leaseholders from making claims.

28. These measures were based on the Law Commission’s recommendations, which the Law Commission developed to address two central problems with the existing law: (i) the uncertainty that leaseholders face over the amount that they will have to pay before they make a claim, and (ii) the time-consuming, costly and uncertain process of resolving disputes over costs through the Tribunal^{[footnote 25]}.

29. The process costs exceptions were included in the LFRA 2024 in line with the Law Commission’s recommendations, in recognition of the fact that there are limited circumstances in which it will remain appropriate to require leaseholders to contribute to a landlord’s reasonable process costs.

30. The government’s objectives in setting prescribed amounts for each of the exceptions are to ensure fairness for both leaseholders and landlords and to provide certainty and clarity to the parties, minimising the scope for costly disputes.

Key considerations

31. While the LFRA 2024 impact assessment made certain reasonable assumptions about the level of process costs in the current market,^{[footnote 26]} existing publicly available data on process costs incurred by landlords, leaseholders and third parties may have limitations. Self-reported data is not always clear on the distinction between statutory and non-statutory claims, whether it includes or excludes sums such as VAT or regulatory fees and expenses and details such as geographical location, the value of the transaction, the seniority of professional advisers and other matters that might be unique to a particular transaction.

32. Even if contemporary evidence of the level of process costs incurred in enfranchisement claims was available, it may be skewed since the leaseholders’ obligation to pay their landlord’s reasonable process costs can reduce incentives for landlords to manage their process costs effectively. While it is possible for leaseholders to dispute a landlord’s process costs in the Tribunal, in practice, the time and costs involved in doing so are unlikely to be worth it for most leaseholders in most circumstances.

33. The proposals presented in this consultation are offered in the context of the limited availability of reliable data on process costs in the existing market. Therefore, a core objective of this consultation is to gather evidence from as broad a range of stakeholders as is possible on their experience of process costs in enfranchisement claims.

34. In the interests of providing clarity and certainty for the parties in enfranchisement claims, the government is persuaded by the analysis undertaken by the Law Commission that the prescribed amount for each exception should be a fixed sum^{[footnote 27]} (which may be different for different types of claims).

35. This means that we do not intend to vary the prescribed amounts based on factors like the property location, transaction value, property type, the parties’ circumstances (e.g. whether leaseholders are individuals or buy-to let landlords and whether landlords or freeholders are individuals, companies, charities or other types of organisation) or the seniority of professional advisers instructed by the parties. We do not intend to increase the prescribed amounts for complex cases either (e.g. where there are intermediate leases), but this consultation seeks views on whether there are any exceptional circumstances in which complexity may justify allowing landlords to recover additional sums from leaseholders (see paragraphs 73 to 75).

36. However, the Law Commission recognised that there are elements of collective enfranchisement claims (where leaseholders collectively buy the freehold of their building) which could result in higher process costs for the landlord. We agree that this may justify adjusting the prescribed amount for collective enfranchisements. Paragraphs 48 to 50 of this consultation set out the government’s proposed approach in respect of such claims.

37. We also wish to consider whether there is a need for professional valuations in low value claims given the modest amounts of premium involved, the fact that the prescribed amount will determine the maximum amount payable to the landlord in these cases (rather than the value) and the availability of a number of online valuation tools. The Standard Valuation Method in the LFRA 2024, including the prescription of the deferment rates and capitalisation rates used in the valuation process, will further simplify the valuation process in enfranchisement claims.^{[footnote 28]}

Options for setting prescribed amounts

38. To implement the process costs provisions in the LFRA 2024, the government must set prescribed amounts for all three exceptions in regulations. These amounts can differ depending on the circumstances or type of claim. In setting the prescribed amounts, a key objective is to strike a fair and proportionate balance between the interests of leaseholders and landlords.

39. The prescribed amount chosen for each exception will be the maximum contribution that a leaseholder may be required to make towards the landlord’s process costs when the exception applies. The Law Commission did not make any recommendations as to what it considers to be an appropriate prescribed amount under each exception.

40. On a practical level, once the prescribed amounts are set, it is likely that they will shape the behaviour of landlords in terms of the costs they are willing to incur. For instance, landlords may only instruct solicitors willing to work for the prescribed amounts. If the prescribed amounts are set too low, then there are risks that enfranchisement claims could be delayed or frustrated (e.g. if it results in landlords failing to engage with the process in a timely manner), to the detriment of leaseholders, and this may add further costs.

Low value claims

41. Where the premium payable by a leaseholder in respect of an enfranchisement claim is less than the reasonable process costs incurred by the landlord (a “low value claim”), the leaseholder will have to pay to the landlord the lower of the landlord’s reasonable process costs and the prescribed amount set by the government in regulations.

Lease extensions and claims to buy the freehold of a leasehold house

42. While existing data on process costs is limited, and this consultation is intended to improve significantly the available data, we agree with the Law Commission that factors such as the location of the premises or the professionals instructed should not affect the fixed sums that are recoverable from leaseholders.^{[footnote 29]}

43. The government therefore considers that a prescribed amount of £1,500 (excluding VAT and necessary disbursements such as search fees, Land Registry fees and other administrative expenses) is a reasonable starting point in respect of a landlord’s legal costs in lease extensions and claims to buy the freehold of a leasehold house^{[footnote 30]}. For example, this would allow a solicitor in a regional private practice with 4 years’ experience and charging around £240 per hour attendance of up to 6 and a half hours. In many cases, more straightforward transactions would be dealt with by more junior fee earners or by a mix of junior and senior fee earners.

44. We recognise that low value claims will involve relatively low sums of money compared to other leasehold transactions. Therefore, we want to ensure that the way in which the prescribed amounts are set does not inadvertently create additional costs for either landlords or leaseholders. Where the low value claim exception applies, the value of the interest acquired by the leaseholder will not affect the total payment made to the landlord (which will be the lower of the prescribed amount and the landlord’s reasonable process costs). This is different from other leasehold claims where valuation will have a much more significant impact on the cost of the claim for leaseholders.  

45. In many cases, we expect that leaseholders may wish to instruct an independent valuer as part of the claim process. This is common practice at present. Where a landlord chooses to instruct their own valuer, irrespective of whether the leaseholder has instructed a suitable valuer, they are making a commercial judgement that the value of the claim is likely to exceed the prescribed amount. If the landlord is correct, they will receive a higher premium as a result. The government’s current view is that landlords should not be able to recover valuation costs through the prescribed amount, where these costs arise from a commercial decision they have taken. 

46. We recognise this may be more difficult in some circumstances, for instance if the leaseholder has not undertaken any valuation, and we would welcome views on whether there are any circumstances in which landlords should be able to recover valuation costs for low value claims as an addition to the proposed prescribed amount. 

47. The government therefore proposes setting a prescribed amount of £1,500 for low value lease extensions and claims to buy the freehold of a leasehold house.

Example 1: application of low value claim exception in a lease extension

Description	Amount	Notes
Prescribed amount	£1,500
Premium payable	£900	This is lower than the prescribed amount, so the claim is a low value claim.
Reasonably incurred process costs	£1,200	This is more than the premium payable by the leaseholder but less than the prescribed amount.
Leaseholder pays the landlord	£1,200	This is the lower of the prescribed amount and reasonably incurred process costs
Contribution to landlord’s process costs	£300	This is the difference between the total payable and the premium (£1,200 - £900)

Question: Costs recoverable by landlords in the case of low value claims – statutory lease extensions and claims to buy the freehold of a leasehold house

For all respondents

Q10 If the prescribed amount was set at £1,500 for lease extensions this would typically result in a leaseholder paying £1,800 to £2,000 once VAT and typical transaction disbursements are added. Do you consider that a prescribed amount of £1,500 (excluding VAT and disbursements) reasonably reflects the process costs likely to be achievable by a landlord seeking best value?

(Select one option)

• yes - £1,500 seems right
• no - it’s too low
• no - it is too high
• not sure

Q11 If you answered no to the previous question, what level of prescribed amount do you think is appropriate for these claims?

Q12 If the prescribed amount was set at £1,500 for claims to buy the freehold of a house this would typically result in a leaseholder paying £1,800 to £2,000 once VAT and typical transaction disbursements are added. Do you consider that a prescribed amount of £1,500 (excluding VAT and disbursements) reasonably reflects the process costs likely to be achievable by a landlord seeking best value?

(Select one option)

• yes
• no - it is too low
• no - it is too high
• not sure

Q13 If you answered no to question 2.1 what level of prescribed amount do you think is appropriate for these claims?

Q14 Given the availability of online valuation tools, do you agree that in low-value cases landlords and leaseholders should be able to agree a valuation without the need for a formal valuation? (Select one option)

• yes
• yes, in most cases (please specify circumstances where a valuation is necessary in low value cases)
• no
• not sure

Q15 If you answered “No” to Question 1.4, how would you propose to mitigate the risk that leaseholders face valuation costs which are disproportionate to the value of the claim in low-value lease extensions and enfranchisements?

Collective enfranchisement

48. Collective enfranchisement claims (buying the freehold of a block of flats) can be more complex, involving more leaseholders and sometimes more complicated transfers of assets.

49. The Law Commission considered that “any fixed costs regime should allow for additional sums to be paid by the leaseholders in respect of the landlord’s process costs where specified extra work has taken place” in a collective enfranchisement.^{[footnote 31]} However, this should not aim to reflect every single feature of a claim which could result in additional costs for landlords, as this would reduce the benefits of their proposed fixed costs regime (simplicity and predictability for the parties) and the Law Commission did not think that all the elements of complexity identified through their consultation process would justify additional contributions from leaseholders.^{[footnote 32]}

50. We agree with the Law Commission’s assessment that the potential additional process costs involved in collective enfranchisement claims should be reflected in the prescribed amount. We consider that, to achieve this, the proposed £1,500 prescribed amount (for lease extensions and claims to buy the freehold of a house) could be adjusted by adding £250 for each unit participating in the collective enfranchisement beyond the first one. This approach would ensure that the prescribed amount rises to reflect the additional costs faced by the landlord with many leases involved, while preserving clarity and certainty for the parties.

Example 2: application of low value claim exception in the collective enfranchisement of a building comprising 10 residential units

Description	Amount	Notes
Prescribed amount	£3,750	For a building of 10 residential units, with all the leaseholders participating in the collective enfranchisement, the total prescribed amount would be (9 x £250) + £1,500. This amounts to a total of £375 per unit.
Premium payable	£2,500	This is lower than the prescribed amount, so the claim is a low value claim.
Reasonably incurred process costs	£4,000	This is more than the premium payable by the leaseholder.
Leaseholder pays the landlord	£3,750	This is the lower of the prescribed amount and reasonably incurred process costs.
Contribution to landlord’s process costs	£1,250	This is the difference between the total payable and the premium (£3,750 – £2,500)

Question: Costs recoverable by landlords in the case of low value claims collective enfranchisements

For all respondents

Q16 If the prescribed amount was set at £1,500 plus £250 for each additional participating unit, a collective enfranchisement of a block of 10 flats would leave the leaseholders responsible for a total of £3,750 excluding VAT and disbursements.

Assuming all ten leaseholders are participating in the enfranchisement each leaseholder ‘s contribution towards the landlord’s costs would be £375 excluding VAT and disbursements; this would typically result in a leaseholder paying £450 to £500 once VAT and typical transaction disbursements are added.

Do you consider that a prescribed amount of £1,500 plus £250 for each additional participating unit reflects the process costs likely to be achievable by a landlord seeking best value in a collective enfranchisement (Select one option)

• yes
• no - it is too low
• no - it is too high
• not sure

Q17 If you answered no to the previous question, what sum do you think the prescribed amount should be?

• the prescribed amount
• the additional amount per participating leaseholder

Ground rent buy outs

51. Ground rent buy outs will be simpler than lease extensions and claims to buy the freehold. The premium will be calculated using a statutory calculation and a variation of the lease is all that will be required to give effect to the transaction. There is no current data on the process costs that leaseholders and landlords are likely to incur in a ground rent buy out, as it is a new right introduced by the LFRA 2024. However, we expect these costs to be lower than for lease extensions and claims to buy the freehold of leasehold houses.

52. The government therefore considers that it would be appropriate to set the prescribed amount for ground rent buy outs at half of the prescribed amount for lease extensions and freehold purchases of leasehold houses. In the case of a prescribed amount of £1,500, this would be £750.

Question: Costs recoverable by landlords in the case of low value claims – Ground rent buy outs

For all respondents

Q18 Do you consider that a prescribed amount of £750 (50% of the lease extension prescribed amount) reasonably reflects process costs (excluding valuation costs) likely to be incurred by a landlord seeking best value? (Select one option)

• yes
• no - it is too low
• no - it is too high
• not sure

Q19 If you answered no to the previous question, what level of prescribed costs do you think is appropriate for these claims?

Failed claims

53. The Law Commission notes that, in a standard open-market residential sale, a seller cannot recover transaction costs if the sale does not complete.^{[footnote 33]} It therefore recommends that where an enfranchisement claim fails, the landlord’s right to recover its costs from the leaseholder should be limited to a small fixed sum. The Law Commission further recommends that this sum should not vary according to the stage the transaction had reached when it failed.^{[footnote 34]}

54. The Law Commission does not offer an opinion on the level of small fixed sum that landlords should be able to recover in these circumstances, but we consider that this should be no higher than the prescribed amount for the low value claim exception, in order to provide certainty to leaseholders and avoid disputes. However, we note that in claims that are not low value the parties are likely to have obtained professional valuations. Therefore, we propose an additional sum of £500 be allowed for landlords if they have instructed a valuer, bringing the prescribed amount to £2,000.

55. The government is considering two options: (1) a fixed sum; or (2) a sliding scale.

Option 1 – A fixed sum

56. The government considers that, in line with the Law Commission’s recommendations, setting a single, fixed sum of recoverable process costs where a claim fails would provide the most clarity and certainty for the parties. This fixed sum (i.e. the prescribed amount for failed claims) could mirror the proposed prescribed amounts used for low value claims:

• £1,500 for lease extensions and claims to buy the freehold of a leasehold house, increased to £2,000 if the landlord is entitled to claim valuation costs;
• £1,500 for collective enfranchisements (buying the freehold of a block of flats), increased to £2,000 if the landlord is entitled to claim valuation costs, plus £250 per additional participating unit beyond the first one; and
• £750 for ground rent buy outs.

57. For example, in a lease extension claim:

Description	Amount	Notes
Premium payable	£5,000	This is not a low value claim
Reasonably incurred process costs	£3,000	Including valuation costs
The prescribed amount (fixed sum)	£2,000	The landlord has incurred valuation costs
Contribution to landlord’s abortive process costs	£2,000	The leaseholder pays the prescribed sum

58. In this example, this option would leave the landlord £1,000 out of pocket. Arguably, however, the landlord may face lower costs in relation to a future claim, given that work had already been carried out in relation to the failed claim.

Option 2 – A sliding scale

59. An alternative option would be to establish a variable prescribed amount, so that the amount that the landlord can recover from the leaseholder in the event of a failed claim depends on the stage that the transaction had reached when it failed.

60. For a lease extension, we consider that these variable prescribed amounts could range from £500 if the transaction failed at an early stage (for example immediately after service of the landlord’s counter notice) rising to £2,000 if the failure was immediately prior to legal completion. Again, this may leave the landlord out of pocket, but the landlord may face lower costs in relation to a future claim, given that work had already been carried out in relation to the failed claim.

Question: Costs recoverable by landlords in the case of failed claims

For all respondents

Q20 Do you favour option 1 (a fixed sum) or option 2 (a sliding scale) of recoverable costs if a transaction fails?

• Option 1
• Option 2
• another option - please specify

Q21 If you favour option 1 (a fixed sum) do you think the amounts proposed are

• yes
• no - it is too low
• no - it is too high
• not sure

Q22 If you answered no to the previous question, what sum do you think the prescribed amount should be?

• the prescribed amount
• the additional amount per participating leaseholder

Leasebacks

61. The LFRA 2024 gives leaseholders the right in a collective enfranchisement to require the landlord to accept a long lease of certain parts of the building, such as commercial units in a mixed-use building or residential units that are not participating in the enfranchisement.^{[footnote 35]} This is known as a leaseback.

62. The Law Commission recommended that leaseholders should contribute towards the landlord’s process costs where they elect to require the landlord to take a leaseback or leasebacks of non-participating parts of the building. While we do not anticipate that significant additional costs should be incurred by the landlord when taking a leaseback, we acknowledge that the leasebacks will reduce the premium to be paid by the leaseholders, potentially significantly.

63. We therefore propose that leaseholders should be required to pay a prescribed amount of £1,000 towards the landlord’s process costs incurred in relation to the first leaseback, increased by an additional £250 for each subsequent leaseback.

64. In addition, to reduce costs while encouraging best practice, the government intends to publish a template form of leaseback for use by landlords and leaseholders, which the parties may use at their discretion. However, if a landlord incurs additional costs as a result of its decision not to use the template form of leaseback, we consider that the landlord should not receive any contribution towards its costs from the leaseholders beyond the prescribed amount.

For all respondents

Question: Costs recoverable by landlords in relation to leasebacks

Q23 Do you agree with the proposal that landlords required to take a leaseback of non-participating parts of a building in a collective enfranchisement should be entitled to receive £1,000 towards their costs in respect of the first leaseback, and £250 for each subsequent leaseback?

• yes
• no - it is too low
• no - it is too high
• not sure

Q24 If you answered no to the previous question, what sum do you think the prescribed amount should be?

• the prescribed amount
• the additional amount per participating leaseholder

Q25 As a landlord are you likely to use a template form of leaseback published by the government?

• yes
• no
• don’t know
• n/a

Third party costs

65. Certain entities that are commonly third parties to modern leases may incur process costs as part of an enfranchisement claim, but do not receive an income from the premium, are not connected to or contracted by the landlord who receives the premium, and will not be able to include those costs as part of a variable service charge.^{[footnote 36]}

66. This could adversely impact resident led management organisations in particular, where they do not have an income or where their sole source of income is derived from service charges, rendering them potentially liable to insolvency. It may also lead to such organisations failing to fully engage with the claim or leave them with disadvantageous contract terms, if they cannot afford professional advice, leading to delays and potential additional costs for leaseholders.

67. The government therefore intends to legislate to add an additional exception to the rule that parties should meet their own process costs, enabling certain third parties to recover process costs from leaseholders in limited circumstances. We envisage that this exception will specifically target resident led management organisations who do not receive the premium, and do not have a source of income enabling them to meet the reasonable process costs that they may be forced to incur as a result of an enfranchisement claim.

68. We do not consider an exception is necessary for management companies who are connected to or contracted by the landlord. Therefore, we are seeking stakeholders’ views on the scope of this proposed exception (in particular the types of third parties that should benefit from it) and on the amount of process costs which the eligible third parties should be entitled to recover under the exception.

Question: Third party costs

Q26 Do you agree that resident led management organisations should be able to recover a prescribed amount for lease extensions?

• yes
• no
• not sure

Q27 Are you aware of any other third parties to leases which will have no other sources of income to meet the costs associated with enfranchisement or lease extensions? Please specify.

Q28 Do you agree that this exception should be limited to resident led management organisations?

• yes
• no
• not sure

If you have answered no, please give your reasons.

Allocation of leaseholder contributions to process costs between landlords

69. Lease extensions and enfranchisements may involve several landlords, for example where there are intermediate leases. In such cases, one landlord (typically the freeholder) will be responsible for conducting the proceedings on behalf of all the landlords. That landlord is usually known as the “reversioner” or “competent landlord”, depending on the type of claim.

70. The reversioner or competent landlord will normally incur the vast majority (if not all) of the process costs in dealing with a claim. However, the government recognises that other landlords could also incur process costs, for example if they are required to accept a leaseback of a unit in a collective enfranchisement.

71. Where a process costs exception applies, the leaseholders’ contribution to the landlord’s process costs will relate to the reversioner or competent landlord’s costs only. The default position under the LFRA 2024 is that no other landlord will be entitled to any amount paid by leaseholders under the exceptions. This means that, if other landlords have incurred costs and the claim then fails, or the claim is a low value claim, they would not be compensated for those costs (through the premium or otherwise).

72. However, the LFRA 2024 allows regulations to be made about the allocation between landlords of amounts paid by leaseholders under the low value and/or failed claim exception^{[footnote 37]}. Regulations may set out circumstances in which the reversioner or competent landlord must pay a proportion of that amount to other landlords, and they may provide for the Tribunal to order payment. We are seeking views on the need for and possible scope of such regulations.

Question: Allocation of leaseholders’ payment between landlords

Q29 What categories of process costs, if any, do you consider landlords other than the reversioner/competent landlord (“other landlords”) are likely to incur in the following types of claim?

• lease extension
• claim to buy the freehold of a leasehold house
• collective enfranchisement (buying the freehold of a block of flats).

Q30 In what circumstances (if any) do you consider that other landlords should receive a proportion of the process costs paid by a leaseholder or leaseholders to the reversioner/competent landlord, under the low value exception or the failed claim exception?

Q31 If so, how should that proportion be determined?

Exceptional complexity

73. The government recognises that not all lease extension and enfranchisement transactions are the same and that ground rent buy out claims involve a new and untested process. There will inevitably be cases where matters are more complex and time consuming and therefore more costly to progress.

74. In cases of exceptional complexity, it may be appropriate to apply a multiplier to the prescribed amount to reflect this. However, this would need to be balanced against difficulties in setting out what constitutes complexity, and whether it is fair for leaseholders to pay more due to that complexity. Noting that leaseholders are not responsible for this additional complexity.

75. Therefore, we would like to hear views from stakeholders about their experiences where transactions have become protracted due to some complicating factor such as there being multiple landlords, intermediate leases or complex lease terms.

Question: Complexity

Q32 Do you think that more complex transactions should warrant a higher prescribed amount?

• yes
• no
• not sure

Q33 What complicating factors do you most often encounter that increase costs?

Multiple landlords	Yes/No
Intermediate leases	Yes/No
More than one freehold title	Yes/No
Missing freeholder	Yes/No
Other (please specify)

Q34 How do they affect the cost of a transaction?

Review of the prescribed amounts

76. From time to time, it may be necessary to review the prescribed amounts in order to reflect present practice. We would like to hear from respondents about what they consider to be the appropriate method and frequency of reviews.

77. Options could include applying a recognised and published index such as the Consumer Prices Index (CPI) or linking to the government’s House Prices Index.

Question: Method and frequency of reviews

Q35 What method of review do you consider most appropriate for the prescribed amount? Please give reasons.

• inflation uprating (measured by CPIH^{[footnote 38]})
• other index (please give details)
• non index based review (please give details)

Q36 How frequently should the prescribed amount be reviewed?

• annually 
• every 5 years 
• aligned with the LFRA 2024 deferment and capitalisation rates review (i.e. every 10 years)

Impacts on protected characteristics

78. In addition to the more specific policy questions, we are keen to understand perceived impact on other areas. The Public Sector Equality Duty, set out in the Equality Act 2010, requires us to have due regard to the need to eliminate discrimination against, advance equality of opportunity for, and foster good relationship between, different groups defined by characteristics protected under the Act. We are seeking views on potential impacts on those groups.

Question 37: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic?

• [Yes/No] Age
• [Yes/No] Disability
• [Yes/No] Sex
• [Yes/No] Gender Reassignment
• [Yes/No] Marriage or civil partnership
• [Yes/No] Pregnancy and maternity
• [Yes/No] Race (colour, nationality, ethnic or national origins)
• [Yes/No] Religion or Belief
• [Yes/No] Sexual orientation
• [If you have answered yes to any of the above]

Please explain your rationale and evidence your thinking where possible.

[Free text]

About this consultation

This consultation document and consultation process have been planned to adhere to the Consultation Principles issued by the Cabinet Office.

Representative groups are asked to give a summary of the people and organisations they represent, and where relevant who else they have consulted in reaching their conclusions when they respond.

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Ministry of Housing, Communities and Local Government
Fry Building
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1. Leaseholders are currently liable for the reasonable costs of landlords under sections 33 and 60(1) of the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) for claims relating to leasehold flats and sections 9(4) and 14(2) of the Leasehold Reform Act 1967 (LRA 1967) for claims relating to leasehold houses. ↩

2. See Chapter 12 of the Law Commission’s 20 July 2020 report Leasehold home ownership: buying your freehold or extending your lease (Law Com No 392). ↩

3. Law Com No 392, paragraph 12.4. ↩

4. The removal of leaseholders’ liability for the process costs of other parties is provided for by new section 19A of the LRA 1967 (inserted by section 38 of the LFRA 2024) and new section 89A of the LRHUDA 1993 (inserted by section 39 of the LFRA 2024). ↩

5. Section 48 of and Schedule 10 to the LFRA 2024. ↩

6. Paragraph 13 of Schedule 10 to the LFRA 2024. ↩

7. See section 50(3) of the LFRA 2024, which came into force on 3 March 2025. ↩

8. See ARC Time Freehold Income Authorised Fund & Ors, R (on the application of) v The Secretary of State for Housing, Communities and Local Government [2025] EWHC 2751 (Admin). ↩

9. These exceptions are introduced by the following provisions of the LFRA 2024: section 38 (for claims relating to leasehold houses under the LRA 1967), section 39 (for claims relating to leasehold flats under the LRHUDA 1993) and paragraphs 13 to 15 of Schedule 10 (for ground rent buy outs). ↩

10. See Law Com No 392, paragraphs 12.43 to 12.48. ↩

11. The LFRA 2024 provisions introducing the exception for failed claims provide for it to apply in relation to a claim that “ceases to have effect”. A claim “ceases to have effect” if (1) it has been withdrawn or is deemed withdrawn, (2) it has been set aside by the court or Tribunal or (3) it has otherwise failed by virtue of the leaseholder failing to comply with an obligation arising from the claim. ↩

12. See Law Com No 392, paragraphs 12.125 to 12.129. ↩

13. his is a new right provided for by section 32 of the LFRA 2024, which inserts a new Part 3A in Schedule 9 to the LRHUDA 1993 (grant of leases back to former freeholder). ↩

14. See Law Com No 392, paragraphs 12.49 – 12.50 ↩

15. See new section 19C of the LRA 1967, inserted by section 38 of the LFRA 2024 ↩

16. See new section 89C of the LRHUDA 1993, inserted by section 39 of the LFRA 2024 ↩

17. See paragraph 15 of Schedule 10 to the LFRA 2024 ↩

18. Law Com No 392, paragraph 12.48 ↩

19. See new section 19B of the LRA 1967, inserted by section 38 of the LFRA 2024 ↩

20. See new section 89B and 89E of the LRHUDA 1993, inserted by section 39 of the LFRA 2024 ↩

21. See paragraph 14 of Schedule 10 to the LFRA 2024 ↩

22. Law Com No 392, paragraph 12.128 ↩

23. See new section 89D LRHUDA 1993, inserted by section 39 LFRA ↩

24. See new Part 3A of Schedule 9 to the LRHUDA 1993, inserted section 32 of the LFRA 2024 ↩

25. Law Com No 392, paragraph 12.81 ↩

26. Leasehold and Freehold Reform Bill Impact Assessment published 31 October 2023 at paragraph 99 ↩

27. See Law Com No 392, paragraphs 12.94 to 12.101 ↩

28. Leasehold enfranchisement valuation rates ↩

29. Law Com No 392, paragraph 12.88 ↩

30. For the purpose of setting the maximum recoverable costs in low value claims. ↩

31. Law Com No 392, paragraph 12.96 ↩

32. Law Com No 392, paragraph 12.97 ↩

33. Law Com No 392, paragraph 12.125 ↩

34. Law Com No 392, paragraph 12.127 and 12.129 ↩

35. See section 32 of the LFRA 2024, which inserts a new Part 3A in Schedule 9 to the LRHUDA 1993 (grant of leases back to former freeholder) ↩

36. New sections 20J and 20K of the Landlord and Tenant Act 1985 (inserted by section 64 of the LFRA 2024), once commenced, will stop management companies and landlords from recovering process costs from the service charge fund ↩

37. See new section 19D of the LRA 1967 (inserted by section 38 of the LFRA 2024) and new section 89G of the LRHUDA 1993 (inserted by section 39 of the LFRA 2024) ↩

38. Consumer Price Inflation (includes all 3 indices – CPIH, CPI and RPI) QMI - Office for National Statistics ↩