Owners of five million leasehold homes to benefit from increased rights and reform to system
Reforms to hand leaseholders greater rights, protections and control over their homes will be brought forward next year alongside plans to bring the feudal leasehold system to an end, the government has announced today (21 November).
Measures in the Leasehold and Freehold Reform Act will be implemented at pace in the new year to allow more leaseholders to buy their freehold or extend their lease without having to wait two years from the point they purchased their property. It will also allow homeowners to take over the management of their building, and ensure they have more transparency of costs and can challenge unfair service charges, along with other changes to bolster homeownership.
The government will also introduce its new draft Leasehold and Commonhold Reform Bill in the second half of 2025, a crucial step towards the next generation of homeowners benefitting from a more modern, functional and fit-for-purpose commonhold system.
Further reforms will be made to tackle unregulated and unaffordable ground rents, end the injustice of 'fleecehold' where homeowners on freehold estates pay fees and remove the draconian threat of forfeiture. These changes, together with strengthened regulation of managing agents, will ensure existing leaseholders are better protected.
Housing Minister Matthew Pennycook said:
"Millions of homeowners across the country will remember with fondness the sense of satisfaction, pride and security they felt when purchasing their own home. Yet, for far too many leaseholders, the reality of home ownership has fallen woefully short of the dream.
"The government is determined to honour the commitments made in our manifesto, and I am pleased today to set out the steps we will take to provide relief to those currently subject to unfair and unreasonable practices and to progress the wider set of reforms necessary to end the feudal leasehold system for good."
The existing commonhold framework requires modernising to ensure it works for all flats in the future, and the government will take steps to make it the default tenure - starting with publishing a Commonhold White Paper in the new year, followed by a consultation on the best approach to banning new leasehold flats.
In January, the government will bring forward more Leasehold and Freehold Reform Act provisions to give leaseholders more rights and security through removing the current 'two-year-rule' so leaseholders no longer have to wait two years after the point of purchase before exercising their right to extend their lease or buy their freehold.
In the Spring, a package of measures will be introduced to expand access and reform the cost rules and voting rights where leaseholders claim the 'Right to Manage' meaning more homeowners in mixed-use buildings can take over management from their freeholders - and leaseholders making claims will no longer have to pay their freeholder's costs in most cases.
Those who achieve the dream of homeownership will also be protected from unscrupulous managing agents through strengthened regulation to drive up the standard of service and ensure value for money. As a minimum this will include a mandatory professional qualification and a new basic standard for managing agents, and the government will consult on this next year.
Further consultations will take place next year on making it easier to challenge unreasonable service charge costs, setting valuation rates used to calculate the cost of enfranchisement premiums, and implementing new consumer protection provisions so those who pay freehold estate charges have more transparency of what they are paying for and the right to challenge at the First Tier Tribunal.
