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Reforms that will benefit leaseholders have finally made it into law - but have yet to come fully into force. We look at what the leasehold reforms mean, what changes have been implemented, what's likely to change next, why there’s a delay with some reforms and what you should do now if you’re a leaseholder.
KEY INFORMATION
The Leasehold and Freehold Reform Act became law in May 2024, with a timeline for implementation published last November. Click here to jump to the timeline.
In January 2025, Matthew Pennycook, Minister of State for Housing and Planning, confirmed that leaseholders can exercise their right to extend their lease or buy their freehold immediately upon purchasing a leasehold property, rather than wait two years. This came into effect from February 2025. However, in reality you’ll need to wait until the Land Registry application has been processed before you can serve the notice.
However, campaigners and leaseholders are still waiting for the rest of the changes to come into effect. We cover what the Act covers and what has/hasn’t come into force below.
In February 2025, many leaseholders were worried to learn that assorted freeholders have been granted leave to apply for a Judicial Review to challenge the threat to their income streams posed by the Leasehold and Freehold Reform Act. This was to be expected and all is not lost – click here for what a Judicial Review means.
While in February 2025, it was also announced that more leaseholders living in mixed-use buildings will be able to exercise their Right to Manage. Currently, non-residential areas in the building such as shops mustn’t make up more than 25% of the building’s entire floor area. However, from 3 March 2025, this threshold increases to 50%. Leaseholders will also no longer be required to cover the legal fees of their freeholder when making a Right to Manage claim.
The government has also promised to publish a draft Leasehold and Commonhold Reform Bill later this year. In March 2025, a White Paper was published including a number of suggestions to make it easier to run buildings under commonhold – a form of ownership that allows flat owners to own and manage their buildings jointly. Read on for more on this.
The Leasehold and Freehold Reform Act 2024 will strengthen existing consumer rights and introduce new ones for leaseholders by:
The government has said full implementation will take years and not months. Here are the hurdles that will need to be jumped first:
Until all this happens, the practical effect on leaseholders is very limited and the existing laws and procedures still stand.
A statement from the government from 21 November 2024, sets out how and when the government will implement parts of the rest of the Act
For advice on your situation make a no obligation enquiry with our leasehold expert partners:
Get expert advice on extending your lease, buying your freehold or applying for the right to manage.
A Judicial Review hearing has been set to take place before the end of July 2025 for freeholders to challenge the Leasehold and Freehold Reform Act and the threat to their income streams.
While this is obviously worrying for leaseholders, the move was widely predicted and shouldn’t be seen as a ‘defeat to the cause of leasehold reform’, says Sebastian O’Kelly of the Leasehold Knowledge Partnership.
When the Bill was debated in Parliament, while the probability of a legal challenge was high, very few conservative peers argued it amounted to a fundamental and unlawful confiscation of property rights.
If the landlords were to win their judicial review, then Parliament would need to bring forward new primary legislation to continue with the reforms. If the government wins, the programme of secondary legislation outlined in November continues.
We stand with Sebastian O’Kelly and other campaigners like the National Leasehold Campaign, and remain convinced that it is a matter of when leasehold comes to an end rather than if it comes to an end.
On December 2nd 2024, the government issued a consultation on the details of the Act’s ban on building insurance referral fees. The proposal is to replace the current practice of freeholders or their managing agents receiving excessive commission with a new permitted fee, to help reduce charges for leaseholders. Leaseholders have until 24th February 2025 to respond.
Further reform of the leasehold and commonhold system over the course of the current Parliament has also been set out, including commitments to:
Paula Higgins, Chief Executive of HomeOwners Alliance, says, ‘We want swift implementation of these reforms – leaseholders have been held hostage for long enough and they deserve better. Also, we don’t want government to backtrack on making lease extensions cheaper because of disgruntled freeholders set to lose out.’
If you are a leaseholder considering whether to extend your lease or purchase your freehold now or to wait, you should seek advice from a leasehold specialist. You can get a free initial consultation and estimate from our leasehold specialist partners. Our advice guide will give you a general idea of what leasehold extension costs to be aware of.
Get expert advice on extending your lease, buying your freehold or applying for the right to manage.
In many cases, we expect leasehold reform to make extending a lease or buying the freehold cheaper. For example, if your lease is below 80 years, it’s likely to be cheaper because marriage value will be abolished. It should also help people paying high ground rents, by capping ground rents in the lease extension calculation – although the cap doesn’t apply in all cases.
However, it won’t necessarily be cheaper for everyone. If your lease is above 80 years or you have a low ground rent, it is more of a gamble as these reforms could make lease extensions more expensive in the future, says Linz Darlington of lease extension specialists Homehold.
Knowing that change is due to take effect but not knowing exactly when it will happen puts leaseholders in a difficult position. The consultation on valuation methods has only been promised by Summer 2025. One suggestion is to set a date in the future when you’ll definitely extend your lease. And to work towards that date and if it comes around and the new reform is implemented (or nearly implemented) then great. But if it isn’t, crack on: you can’t wait forever.
Ground rents on new properties were banned in 2022. A cap on ground rents on existing leases was not included in the Act but action has been promised in the second Bill on Commonhold.
Yes, under the new Act, you will no longer have to pay half of the marriage value to your freeholder if your lease is shorter than 80 years. However, while this is positive news for leaseholders, it’s highly contentious for freeholders and legal proceedings have been launched to challenge this in the courts.
No, leasehold is not being abolished in the UK. However, the Leasehold and Freehold Reform Act will ban the sale of leasehold houses in England and Wales (other than in exceptional circumstances). We’ve been campaigning for this since 2017 and asked for this in our Homes Held Hostage report. Since the previous government announced its intention to end leasehold houses, we saw the sale of new leasehold homes dwindle. Even so, we welcome formalising it in law.
Also, the government has announced its plans to abolish leasehold for all new flats via a new bill, the Leasehold and Commonhold Bill. We are delighted to see the end of leasehold as it is an outdated feudal system that needs to go. But the battle is not over as freeholders will continue to object and government is dragging its heels. we will continue to campaign – with so many other voices – for the end of leasehold.
The legislation governing leasehold ownership currently applies in England and Wales, however there are some differences in notices and other document requirements.
The Leasehold Reform (Ground Rent) Act 2022 applies to long residential leaseholds in Wales. You can find guidance from the Welsh Government for leaseholders, landlords and agents here. While the majority of the provisions in the Leasehold and Freehold Reform Act 2024 apply to Wales; the Welsh Government will introduce subordinate legislation to implement the act.
And the Welsh Government’s Programme for Government 2021-26 commits to enacting the recommendations of the Law Commission in relation to leasehold reform and ensuring that estate charges for public open spaces and facilities are paid for in a way that is fair.
You can get a free initial consultation and estimate from our leasehold specialist partners
Get expert advice on extending your lease, buying your freehold or applying for the right to manage.
If you are in the process of buying a new build, you should check that your lease is 990 years and that the ground rent should be set to zero. Since June 2022, developers cannot sell newly built flats with ground rent.
If you’re buying an existing leasehold property, you may be able to negotiate the price as other buyers have been put off buying leasehold. If the property has a long lease, you will get the advantage of a cheaper leasehold extension if the rules come into force.
If you have begun the formal (or statutory) route to extend your lease, then the answer is no. You cannot put a temporary hold on the process. You have a simple choice. Carry on or withdraw.
The planned reforms certainly make owning a leasehold property more attractive. However, there are still benefits of owning the freehold. For example, if you’re a leaseholder you’ll still need to pay your freeholder’s costs for the maintenance of the building. And you’ll also need to seek permission from the freeholder if you want to undertake any major works on your home.
It’s expected that leaseholders will not have to pay their freeholder’s legal and valuation fees in many cases when they do a lease extension, under the new law. However, there are exceptions such as for lease extension claims where the premium is under a certain level (yet to be set) or if the leaseholder doesn’t complete the lease extension.
Shared owners do not have the legal right to extend their lease unless they have staircased to 100% and this will still be the case with the new Act. If the housing providers agrees to a lease extension, then the shared owner will benefit from the reforms to how the cost of the extension will be calculated.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
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