Leasehold Right to Manage reforms take effect on 3 March 2025
The Leasehold and Freehold Reform Act 2024 (Commencement No. 3) Regulations 2025 mark the latest significant step towards strengthening the rights of leaseholders and providing them with greater powers and protections. These changes will directly impact estate and letting agents across the UK, as they affect how leasehold properties are managed, bought, and sold.
As property professionals, it’s crucial to understand how these regulations may affect your day-to-day operations, as well as the support Propertymark can offer to help you navigate the evolving landscape.
View the Leasehold and Freehold Reform Act 2024 (Commencement No. 3) Regulations 2025 →
Key changes and implications for leaseholders
The introduction of these regulations follows the broader Leasehold and Freehold Reform Act 2024, which aims to make the leasehold system fairer and more transparent.
The following provisions come into force on 3 March 2025.
- Section 49 (non-residential limit on right to manage claims)
- Section 50 (costs of right to manage claims)
- Section 51 (compliance with obligations arising under Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002(2))
- Section 52 (no first-instance applications to the High Court in tribunal matters)
- Section 64 (restriction on recovery of non-litigation costs) insofar as it inserts section 20J of the Landlord and Tenant Act 1985(3) as regards the right to manage.
The non-residential limit on the right to manage claims will rise from 25% to 50%, expanding leaseholders’ access to collective enfranchisement and the right to manage, and limiting the costs they can be made liable for.
How this affects estate and letting agents
These changes could have a range of effects when dealing with the sale and management of leasehold properties. The revised ground rent rules and the ability for leaseholders to extend their leases could influence property valuations. Estate agents must be aware of how these changes affect the desirability and saleability of leasehold properties.
Agents involved in leasehold sales must be prepared for increased interest from buyers keen to extend their leases. They will need to assist clients with navigating the new lease extension processes and provide advice on the potential costs and benefits of such extensions.
Many leaseholders may not fully understand their new rights under the reforms. Letting agents will need to stay up-to-date with the regulations to guide tenants effectively, especially when it comes to disputes or questions about lease terms.
Agents who manage leasehold properties will need to maintain clear communication with freeholders, ensuring that lease terms comply with the new rules and that any issues regarding ground rent or lease extensions are addressed promptly.
Staying compliant
When managing or selling leasehold properties, agents should assess whether ground rents are in line with the new regulations and consider how lease extensions may impact a property’s market value. Engage with both leaseholders and potential buyers to make them aware of the new reforms and the benefits they bring. Proactively providing information is the best way to build trust with clients who may feel uncertain about the changes.
These regulations are part of a wider reform agenda, so staying up-to-date on future legislation and regulatory updates will help professionals stay ahead of potential challenges.
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