The government has consulted on exceptions to the rule that each side pays its own process costs when leaseholders buy their freehold or extend their lease under the Leasehold and Freehold Reform Act 2024.
Key facts
- Who: Leaseholders buying the freehold or extending a lease in England and Wales, their landlords, and resident-led management organisations
- From: Consultation published 15 July 2026
- Source: Leasehold enfranchisement process costs
The Leasehold and Freehold Reform Act 2024 will make several significant changes to the statutory enfranchisement processes. These are the routes through which leaseholders can buy the freehold of their property or extend their lease in England and Wales.
The Act requires each party to bear their own non-litigation costs, known as "process costs", except in a limited number of cases. The exceptions are where:
- a claim is of low value;
- a claim fails because of an act or omission of the leaseholder; or
- enfranchising leaseholders require a freeholder to receive a leaseback of flats held by leaseholders who are not participating in a collective enfranchisement.
The government also intends to introduce an additional exception. It would allow certain third parties to leases, such as resident-led management organisations, to recover their process costs from leaseholders where they would otherwise be at risk of insolvency. The consultation asks for views on bringing this forward in primary legislation.
The Secretary of State and the Welsh Ministers have powers to prescribe, in secondary legislation, the maximum amount of costs that landlords will be able to recover from leaseholders under the exceptions.
The consultation asks about the levels of process costs currently paid in enfranchisement transactions. It also seeks views on the government's proposed approach to implementing the exceptions under the Act.
The answers will help inform the secondary legislation that will prescribe the process costs of landlords payable by leaseholders where an exception applies.
Separately, the government is also consulting on prescribing the enfranchisement valuation rates.
What this means for leaseholders and landlords
The general rule under the 2024 Act is that each side bears its own process costs, with the exceptions listed above. The maximum amounts landlords can recover under those exceptions are to be prescribed in secondary legislation.
Anyone planning or involved in a lease extension or freehold purchase may wish to check how costs are dealt with in their own transaction and to keep track of the regulations that follow. Getting advice before committing to a claim or a deadline is sensible where costs are in dispute.
Sources
- Leasehold enfranchisement process costs, GOV.UK: https://www.gov.uk/government/consultations/leasehold-enfranchisement-process-costs