Major leasehold reform is under way in England and Wales. We explain what the Commonhold and Leasehold Reform Bill and the Leasehold Toolkit mean for flat owners who want to release equity — and how ground rent and lease length issues have historically been a barrier to later-life lending.
2026 has brought the most significant overhaul of English and Welsh leasehold law in a generation, with two major developments arriving in quick succession.
On 20 May 2026, the government published its Leasehold Toolkit — a practical online resource designed to help leaseholders understand their rights and navigate lease extension, collective enfranchisement, and other processes introduced or strengthened by recent legislation. The toolkit consolidates guidance across multiple pieces of legislation and is aimed at reducing the barriers that have historically prevented leaseholders from acting on their rights.
Confirmed in the King's Speech in May 2026, the Commonhold and Leasehold Reform Bill goes further than any previous legislation. Its headline provisions include:
Separate from the new Bill, the Leasehold and Freehold Reform Act 2024 is already in force. Its key effects on leaseholders include:
Leasehold flat owners have long faced specific difficulties when trying to access equity release or lifetime mortgages. These are worth understanding even if you believe your property is unaffected, because the reform changes what was previously a common barrier.
| Issue | Why It Blocked Equity Release | Status in 2026 |
|---|---|---|
| Short lease (under 80 years) | Lenders require sufficient lease term to outlast the loan; below 80 years the property becomes harder to sell and value | Still a barrier — must be addressed before applying |
| Escalating ground rent | Doubling or RPI-linked ground rents made properties unmortgageable; lenders refused to lend | Capped/banned for most leases under 2022 and 2024 Acts |
| High or unpredictable service charges | Lenders assess ongoing affordability; erratic charges raised concerns about long-term solvency of the building | More transparent under 2024 Act but still assessed by lenders |
| Poorly managed buildings | Cladding issues, major works requirements, and building safety defects can make a property unlendable | Building safety remediation ongoing; each property assessed individually |
Ground rent reform and equity release: The cap on ground rents under the Leasehold and Freehold Reform Act 2024 means that many leasehold properties previously rejected by equity release lenders because of escalating ground rents are now eligible. If your property was declined in the past, it may be worth reassessing with current lender criteria.
The most important practical requirement for leasehold equity release remains the remaining lease term. The standard rule across most lifetime mortgage providers is:
The lease must have at least 75 years remaining after the end of the loan term.
Because a lifetime mortgage runs until death or entry into long-term care — potentially 20–30 years or more from the date of application — this effectively means many lenders want to see a minimum of 100–125 years remaining on the lease at the point of application. Some lenders will accept shorter leases, but on less favourable terms or with a requirement to extend the lease first.
One concern sometimes raised by leaseholders is whether the new legislation — particularly provisions relating to enfranchisement and conversion to commonhold — could interfere with an existing equity release arrangement or complicate a future application.
The government has been explicit on this point. Equity release arrangements are preserved as an explicit exception within the new leasehold restrictions. This means that holding a lifetime mortgage on a leasehold property does not conflict with the new framework, and lenders with security over leasehold properties are protected in the event of collective enfranchisement or conversion to commonhold.
In practice, if leaseholders in a building successfully convert to commonhold, the equity release lender's security interest is preserved and simply re-registered against the new commonhold title. This is an important protection for both borrowers and lenders, and it means the shift away from leasehold tenure does not create a barrier to equity release for current or future applicants.
If you own a leasehold flat and are considering equity release, the following steps will help you understand where you stand:
Not all lenders have the same criteria. Leasehold equity release eligibility varies significantly between providers. Some specialist lenders are more flexible on lease terms and property types. An independent adviser with whole-of-market access is essential for leasehold cases.
Own a leasehold property and want to know if you can release equity? Verity Home provides specialist advice on later-life lending for all property types — get a free consultation.
Book a Free ConsultationThe direction of travel in leasehold reform is broadly positive for flat owners seeking equity release. The ground rent changes already in force have removed one of the most common historic barriers. The move towards commonhold over the coming years — while gradual — could eventually make leasehold flat ownership more straightforward for lenders to assess, as commonhold titles carry no lease term concerns.
In the medium term, the Commonhold and Leasehold Reform Bill and associated changes could improve the mortgageability of a wide range of properties that have previously been difficult to lend against. Lenders are actively monitoring the legislative landscape, and criteria are likely to evolve as the law bedded in.
For a full overview of how equity release works on leasehold properties, see our dedicated guide on equity release on leasehold property. For a general introduction to the product, visit our equity release explained page, or read our guide to lifetime mortgages.