Sarah Mansfield, a specialist in landlord and tenant law at Excello Law, has highlighted several pivotal aspects of the government’s proposed overhaul of the leasehold system in England and Wales. She noted:
“Once the Act is in force, it should make it cheaper for people with leases below 80 years or with a high ground rent to extend their leases and allow longer extensions of 990 years. However, there is no guarantee it will make lease extensions cheaper for those with leases above 80 years and without a high ground rent. For these individuals, it is possible that the changes could lead to increased costs.”
Sarah also welcomed proposed reforms to the Right to Manage process, explaining:
“Leaseholders claiming the right to manage their building will be able to do so provided no more than 50% of a building’s total floorspace is in non-residential use, which is an increase from the current and rather arbitrary limit of 25%, albeit that this is still subject to debate.”
She emphasised the importance of addressing estate charges, an area often criticised for a lack of transparency. “For years, landlords have been able to avoid being challenged over estate charges. This reform will require landlords to be more open about charges and the work done to maintain their estates, while allowing leaseholders to challenge these charges at Tribunal.” She added that secondary legislation set for January 2025 will offer further guidance on these matters, aiming for greater clarity and fairness.
Leasehold Reform: A Timeline for Change
The UK government has committed to reforming the leasehold system by the end of the current parliament. The planned changes are set to include significant shifts in how leaseholders interact with their freeholders. Key milestones include:
- Abolition of the ‘Two-Year Rule’ (January 2024)
From the beginning of next year, leaseholders will be able to extend their lease or purchase their freehold immediately after acquiring their property, removing the current requirement to wait two years. - Empowering Leaseholders in Mixed-Use Buildings (Spring 2024)
Leaseholders in buildings with mixed residential and commercial uses will gain greater rights to assume management responsibilities from freeholders. Additionally, leaseholders making claims will no longer need to cover the freeholder’s costs in most cases. Secondary legislation will clarify procedural details such as voting rights. - Introduction of the Leasehold and Commonhold Reform Bill (Second Half of 2025)
This landmark bill aims to make commonhold the default tenure type for new builds, an ambitious step that seeks to replace the leasehold system altogether.
Enhancing Transparency and Accountability
Among the changes, the government plans to introduce a redress scheme to ensure leaseholders are better informed about charges and have greater ability to challenge them. This includes banning excessive insurance commissions and requiring detailed disclosures about charges.
Sarah highlighted that such measures could bring long-overdue accountability to the system, providing leaseholders with tools to dispute unreasonable costs effectively.
Looking Ahead
The government’s reforms signal a decisive move to modernise property ownership structures in England and Wales. However, as Mansfield and other experts have noted, the complexity of the leasehold system requires careful, staged implementation to address longstanding inequities while avoiding unintended consequences.
For the full original article by journalist Ryan Bembridge, visit Property Wire.
