UK Government’s leasehold reform timeline unveiled

Leasehold reform timeline unveiled – the government will overhaul the leasehold system in England and Wales by the end of the current parliament.

From January the ‘Two-Year Rule’ should be abolished, meaning leaseholders will be able to extend their lease or purchase their freehold immediately after acquiring their property.

From Spring leaseholders in mixed-use buildings should be able to assume management responsibilities from freeholders. In most cases, leaseholders making claims will no longer have to cover the freeholder’s costs. However, secondary legislation is required to clarify voting rights and other procedural aspects.

Thirdly, in the second half of 2025, the government should introduce the Leasehold and Commonhold Reform Bill, which aims to establish commonhold as the default tenure type by the end of the current parliament.

Mark Chick, director of the Association of Leasehold Enfranchisement Practitioners, and a partner at Bishop & Sewell LLP, said:

“We see this announcement as a positive step forward.

“It may not yet go as far as some commentators hope, but it shows an appreciation by government that reform in this area is complex and will take time.

“And importantly, it puts in place a timeframe for reform which will be much welcomed by those – from individual leaseholders to professional advisers – who have been adversely affected by uncertainty for the past year.”

The Leasehold and Freehold Reform Bill was rushed through parliament in the last few days of the last Conservative administration.

Sarah Mansfield, Landlord & Tenant Partner at Excello Law, said:

“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.

“There is no guarantee that it will make lease extensions cheaper for people with leases above 80 years who don’t have a high ground rent.

“For these people, it is possible it will make it more expensive.

“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.

“One welcome change will be that those people who are subject to estate charges will finally be able to challenge the reasonableness at Tribunal.

“For years this has been a strange anomaly meaning that landlords have been able to avoid being challenged over estate charges and now will have to be open and transparent over the charges and the work done to maintain their estates.

“There is a redress scheme proposed to ensure all leaseholders are provided with more information of the charges and banning excessive insurance commissions, plus provision of more information on how to challenge those charges if dissatisfied.

“The government announced yesterday that this secondary guidance and legislation will be provided in January 2025 to come into force in the Spring and is eagerly awaited by many leaseholders.”

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