Leasehold reform in England and Wales: What’s happening and when?

Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 received royal assent on 24 May 2024. The remaining parliamentary stages of the bill were fast-tracked in the wash-up period before the 2024 general election.

The act applies to England and Wales. It implements commitments in the Conservative government’s 2017 housing white paper to “improve consumer choice and fairness in leasehold.” It also takes forward many of the leasehold reform recommendations made by the Law Commission in their reports of 2020.

The act will strengthen leaseholders’ rights. It will:

• make it cheaper and easier for leaseholders in houses and flats to extend their lease or buy their freehold, including by removing the requirement to pay marriage value.

• increase the standard lease extension term to 990 years, with ground rent reduced to a peppercorn (zero financial value), upon payment of a premium.

• change the qualifying criteria to give more leaseholders the right to extend their lease, buy their freehold and take over management of their building.

• ban the granting of new leasehold houses (with some exceptions).

• improve the transparency of:

  • service charges and give leaseholders a new right to request information about service charges and the management of their building.

  • administration charges and buildings insurance commissions.

• remove the presumption that leaseholders pay their landlord’s legal costs when challenging poor practice and give them a new right to apply to claim their legal costs from their landlord.

• extend access to redress schemes for leaseholders where the freeholder manages the property directly.

• ensure that relevant property sales information is provided to leaseholders in a timely manner.

The act will also strengthen the rights of freehold homeowners on private and mixed-tenure estates. The Library’s constituency casework page on Freehold estate management provides further information about these measures.

The explanatory notes to the 2024 act provide further information on its provisions.

The act follows on from the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for most new residential leasehold properties in England and Wales.

When will leaseholders benefit?

Although the 2024 act has received royal assent, the majority of the provisions are not yet in force. Many will require further consultation and secondary legislation to be commenced.

The Labour government has committed to implement the act “as quickly as possible”, whilst recognising “the significant complexity of the task and the importance of taking the necessary time to ensure that reforms are watertight.”

The Housing Minister, Matthew Pennycook, set out the government’s intended sequencing for bringing the act’s provisions into force in a written statement to Parliament on 21 November 2024. He also reported that a small number of specific but serious flaws had been identified in the act which would need to be rectified via primary legislation.

To date the government has:

• launched a consultation on proposals to increase the transparency of buildings insurance fees charged to leaseholders. The consultation closes on 24 February 2025.

• laid regulations to permit leaseholders to extend their lease or buy their freehold without having to wait for two years after purchasing their property. The regulations came into force on 31 January 2025.

• laid regulations to implement the act’s Right to Manage (RTM) provisions. This includes changing the qualifying criteria to give more leaseholders the RTM and removing the requirement for leaseholders to cover the freeholder’s legal fees when making an RTM claim. The regulations will come into force on 3 March 2025.

The act sets the method for calculating the cost of a statutory lease extension or freehold acquisition. Marriage value will no longer form part of the calculations. The government expects to consult in summer 2025 on the rates to be used in the calculations. The rates will then need to be set out in secondary legislation.

The Leasehold Advisory Service (LEASE) has published information for leaseholders who are considering extending their lease: Should I wait to extend my lease? I have heard that planned changes could make lease extension cheaper.

The Leasehold and Commonhold Reform Bill

In the King’s Speech 2024, the government committed to “take steps to bring the feudal leasehold system to an end”. It intends to publish a draft Leasehold and Commonhold Reform Bill in the second half of 2025, so that it may be subject to broad consultation and additional parliamentary scrutiny.

The bill would:

• enact remaining Law Commission recommendations to strengthen leaseholders’ rights to extend their lease, buy their freehold, and take over management of their building. The government also intends to consult in 2025 on options to restrict the sale of new leasehold flats.

• reinvigorate the commonhold tenure by modernising the legal framework. Commonhold was introduced in 2002 as a way of enabling the freehold ownership of flats and avoiding the shortcomings of leasehold ownership. However, fewer than 20 commonhold developments have been established since the commonhold legislation came into force. The Law Commission put forward proposals for improving commonhold in 2020. The government has said it will publish a white paper on commonhold reform early in 2025.

• regulate ground rents for existing leaseholders.

• remove the threat of forfeiture as a means of ensuring compliance with a lease agreement.

• strengthen the rights of freehold homeowners on private or mixed-tenure residential estates. The government will consult in 2025 on the best way to achieve this.

The government also wants to strengthen the regulation of property managing agents and will consult on options in 2025. 

Leasehold reform in Wales

The legislation governing leasehold ownership currently applies in England and Wales but there are some differences in notices and other document requirements.

The Leasehold Reform (Ground Rent) Act 2022 applies to long residential leaseholds in Wales. The Welsh Government has published guidance for leaseholders, landlords and agents.

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.

The Welsh Government’s Programme for Government 2021-26 commits to “legislate to enact the recommendations of the Law Commission in relation to leasehold reform.”

Further information

Library briefing: Leasehold and Freehold Reform Bill 2023-24: Progress of the Bill

Library briefing: Leasehold and Freehold Reform Bill 2023-24

Library briefing: Leasehold and Commonhold Reform

Gov.uk: Guide to the Leasehold and Freehold Reform Bill

About the author: Hannah Cromarty is a researcher at the House of Commons Library specialising in housing and homelessness.

Disclaimer

The Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.