The government has pledged to overhaul the leasehold system by the end of this Parliament, giving leaseholders more rights and greater control over their properties while ultimately bringing what it calls the ‘feudal’ system as it stands currently to an end. (Leaseholders have the right to live in a place for a set period and in return pay the freeholder yearly ground rent as well as potentially high service charges. There are some five million properties in these circumstances across England and Wales.)
But some campaigners have expressed their fears over possible hold-ups to these reforms, which they argue could come too late for existing leaseholders, and have accused ministers of dragging their heels.
Housing Minister Matthew Pennycook said last month that, before the next election, an arrangement of ‘commonhold’, in which people own their homes without a lease which expires – will become the default tenure. However, the existing commonhold framework needs updating so that it works for all flats, and a Commonhold White Paper is planned for early 2025.
He outlined a clear timetable for leasehold reform, something which hadn’t been done previously. Mr Pennycook added that some but not all aspects of the Conservatives’ Leasehold and Reform Bill, which received Royal Assent in May 2024 and gained cross-party support, would come into force, although it needs secondary legislation before it can be used in full.
In the King’s Speech in July, the freshly elected government introduced a draft Leasehold and Commonhold Reform Bill, albeit without a clear timeline. However, on November 21, Mr Pennycook’s ministerial statement did incorporate a timeline for reform. And the government says it will introduce its new draft bill during the second half of 2025.
Measures to be introduced include:
- Following a consultation and the white paper mentioned above, the government is to explain by the second half of 2025 how it will ban new leasehold flats.
- The rule which prevents leaseholders from extending their leasehold or buying the freehold for the first two years after completing the purchase of their property will be scrapped ‘at pace’ at the start of next year, giving leaseholders greater rights and security under the Leasehold and Reform Act.
- From spring 2025, the government promises a package of measures, including putting greater numbers of leaseholders in mixed-use buildings in a position to take over management from the freeholders, known as the ‘Right to Manage’.
The government has also pledged to hold a consultation on how to make it easier for leaseholders to challenge service charges, so that people have greater clarity on what they are paying for at First Tier Tribunal. Meanwhile, the plan is to require landlords to seek court approval before they can pass on legal costs to leaseholders, in most cases. It will also work to convert flats to commonhold arrangements.
Additionally, there will be moves to “drive up the standard of service and ensure value for money”. As a minimum, this is set to include a compulsory professional qualification and a new basic standard for managing agents, on which the government will hold further consultations in 2025.
Further reforms are set to tackle “unregulated and unaffordable” ground rents and introduce stronger regulation of managing agents.
Mr Pennycook continued: “We fully appreciate the need to act urgently. For too many leaseholders, the reality of home ownership has fallen woefully short of the dream.”
But the National Leasehold Campaign (NLC)’s Katie Kendrick insisted: “The government’s published intention to ‘act as quickly as possible’ will not be quick enough”.
Before it was elected, Labour said it would bring in legislation scrapping leasehold altogether during its first 100 days in power, a pledge which it has since stopped short of committing to.
Although the changes being mooted are for England, the Westminster government has said it would work with the government in Wales in reforms there, while there are no leasehold properties in Scotland and very few in Northern Ireland.
Oakfield says
At Oakfield Estate Agents, we broadly welcome the government’s measures due to come in, and agree that there was significant room for improvement in the previous leasehold system. At the same time, we have a degree of sympathy for those who say that these reforms have been a long time coming. We work across East Sussex, on sales and rentals as well as block management, and have been following the developments mentioned above with interest.
Given that the planned reforms involve a measure of tightening of the regulations and making things stricter for managing agents, it will become more important than ever to work with a specialist block management firm which is fully abreast of the latest legislation.
Oakfield, independently owned and with local offices in Hastings, Bexhill and Eastbourne as well as Uckfield, Lewes and Heathfield, is uniquely placed to offer a superlative service in these areas. What’s more, we’ve been successfully established in our part of the world since the mid-1990s.
We work with investment landlords, residents’ management and right-to-manage companies and look after buildings of any size. Plus we have a string of important industry affiliations.
Give us a call today to discuss the forthcoming changes to leasehold, and to see how we might be able to work together.