If your lease is under 80 years, the biggest number in your lease extension premium is about to be decided by a consultation very few owners have read. The Government is asking how to set the deferment rate and the capitalisation rate, the two figures inside every statutory extension calculation once the Leasehold and Freehold Reform Act 2024 (LAFRA) switches on. Responses close at 11.59pm on 21 October 2026.
The headline of leasehold reform has always been the end of marriage value. This consultation is where that headline turns into a number, and the number could quietly hand much of the saving back to freeholders.
What the consultation is deciding
The Ministry of Housing, Communities and Local Government opened the consultation on leasehold enfranchisement valuation rates on 15 July 2026. It was due to close on 23 September, then on 7 September the Government added four weeks. The document is unusually plain about why it matters: the new valuation method in the 2024 Act "cannot be brought into force without the deferment and capitalisation rates being set by the government in secondary legislation". No rates, no reform.
On the deferment rate, the consultation puts three options forward:
- Keep the Sportelli rates: 4.75% for houses and 5% for flats, fixed by the Lands Tribunal in 2007 and used in almost every valuation since.
- Update them. The Government Actuary's Department (GAD) modelled this in September 2025 and arrived at 6.05% for houses and 6.3% for flats, with alternative approaches producing 5.05% and 5.85%. A purely mechanical update of the 2007 method produced 1.61%, which GAD did not recommend. The consultation adds that these figures "do not represent upper and lower boundaries".
- Do something different. A single combined rate, rates that vary by property type or lease length, or another financial model.
The capitalisation rate, which values the ground rent the freeholder gives up, gets a similar menu. Once set, the rates must be reviewed every 10 years, and no figure is proposed for either.
Why the deferment rate matters more than marriage value on a short lease
The deferment rate is the discount applied to the freeholder's right to get your flat back when the lease runs out. A higher rate makes that distant right worth less today, so the premium falls. A lower rate does the opposite. On a 120-year lease the reversion is a rounding error whatever the rate. On a 65-year lease it is the bulk of what you pay once marriage value is gone.
Take a £400,000 London flat with 65 years remaining and a peppercorn ground rent. Under today's rules, with the 5% Sportelli rate and half the marriage value going to the freeholder, the premium comes to about £46,000. Under the new method at the same 5%, with marriage value removed, it is about £17,000. At GAD's 6.3% it is roughly £7,500. Now run it the other way. At 4% the premium climbs back to about £31,000, and at 3.5% to about £43,000, almost where you started. Nobody has proposed 3.5%, but freeholders have every reason to argue the rate down, and six freeholder groups are already taking the Act to the Court of Appeal, with a hearing listed for April 2027.
These are illustrative figures using 80% relativity and no fees, so treat them as a shape rather than a quote. The shape is the point: no marriage value plus a low deferment rate could leave a 65-year lease paying close to what it pays now.
What changes today
Nothing. Marriage value is still payable on every lease under 80 years, the 5% Sportelli rate still applies, and a Section 42 notice served this week is valued under the 2007 rules. The Government has not given a date for the regulations, and the Court of Appeal hearing sits in the way of the marriage value change whatever the consultation decides. Prime Minister Andy Burnham promised the Labour conference on 29 September 2026 a leasehold Bill before Christmas, but that Bill covers commonhold and ground rents, and the rates come separately with no published timetable.
For what the Act has and has not switched on, see our guide to the Leasehold and Freehold Reform Act 2024 and our earlier piece on why marriage value abolition is still waiting.
What it means if you own a short lease flat
The honest read is that the rate is unknown and the timing is unknown, so the decision comes down to how much lease you have left and how long you can wait.
- Above 80 years. Marriage value does not apply to you yet, and on a long lease the deferment rate is small money. Watch the date your lease crosses 80, because that line still exists under current law.
- Between 70 and 80 years. Extending now, under the current rules, avoids marriage value but pays the 5% rate. Waiting means betting the rate lands high and the regulations arrive before your lease drifts further. Ask a RICS valuer to model both. Our guide to marriage value shows how quickly the figure grows below 80.
- Between 60 and 70 years. Most mainstream lenders step back under 70 years and the discount to a long-lease flat runs at about 15% to 30%. On our example, a 65-year lease pays about £46,000 to extend today. The reform might cut that to £7,500 or leave it near £31,000, and every year of waiting makes the reversion bigger.
- Under 60 years. The discount can pass 30% and your buyers are mainly cash. The options have not changed: extend under the current rules, buy the freehold with your neighbours, or sell to a buyer who does not need a mortgage. Our selling options guide sets each out.
Anyone can respond before 21 October, including leaseholders, and the questions on the deferment rate are the ones that matter. Responses go through the MHCLG consultation portal or by email to LFRAratesconsultation@communities.gov.uk.
Where to read more
The consultation document and the GAD report are on Gov.uk. The Leasehold Advisory Service explains how the lease extension reforms are meant to work, and the Leasehold Knowledge Partnership sets out why the numbers matter more than the slogans. If you are weighing up serving a notice, our Section 42 notice guide covers the process as it stands.
If you would rather not wait for a rate nobody can predict, get in touch for a free, no-obligation valuation. We buy short lease flats for cash, across London and the rest of the UK. The sale completes in weeks, with no chain and no fees.