Drop the Two-Year Wait: Labour's Latest Leasehold Reforms Simplified
When does the Labour administration plan to revise the leasehold system structure?
Stuck playing landlord to your leasehold property? Well, you're in luck! The Leasehold and Freehold Reform Act of 2024 is here to shake things up, and the newest Labour government reforms are set to unshackle you from the two-year wait for extending your lease or purchasing your freehold.
It's been half a year since this groundbreaking bill took a quick trip through Parliament before the general election. And while the new Labour government pledged to flesh out any loose ends in leasehold reforms during the King's Speech, timelines are proving a bit more slippery than expected.
Back in late January 2025, Housing Minister Matthew Pennycook ushered in new regulations that eliminated the two-year ownership condition for flat and house leaseholders to extend their lease or grab that freehold key. Pennycook promised enhanced "flexibility" for claimants, with the potential to save loads of dough along the way.
However, Katherine Thorpe, a legal professional at Irwin Mitchell, voiced uncertainty regarding these changes. For one, leaseholders still have to jump through administrative hoops, say proving ownership, that could cause delays and complications during lease extensions and enfranchisement claims.
Other leasehold reforms, like capping ground rents, could be slower potatoes to ripen, particularly since freehold campaigners are challenging these changes in court.
Labour's Promised Leasehold Reforms
The King's Speech following the general election outlined a Draft Leasehold and Commonhold Reform Bill, which vowed to stamp out "feadalism" in leasehold ownership.
Pennycook outlined a schedule earlier this year. Starting in the spring of '25, leaseholders will no longer have to fork over the freeholder's legal costs when reclaiming property control.
But the light at the end of the leasehold tunnel for homeowners stuck in hard-to-sell or remortgage properties remains elusive, as the government intends to conduct additional consultations and issue secondary legislation to complete other reforms in the coming months.
A consultation has been promised on outlawing insurance commissions for landlords, property managing agents, and freeholders. These fees would be replaced with transparent and fair ones, Pennycook said.
There will also be a consultation on service charges and another on legal costs, with the goal of making it simpler for leaseholders to challenge charges.
The government has also promised to reform pricing for enfranchisement, but this will require consultation and additional legislation.
Consultations on protecting residential freeholders on private and mixed-tenure housing estates, banning new leasehold flats, and transitioning existing ones to commonhold are also on the agenda.
The Draft Bill also tackles unregulated and unaffordable ground rents and has a consultation planned on reforming leaseholder cost-sharing for large property repairs.
The government has also vowed to regulate managing agents.
Missed Opportunity or Stubborn politics?
Although hints of a timeline are welcomed, the demands for leasehold reform campaigners are echoing disapproval regarding the delays.
Linz Darlington, managing director of lease extension firm Homehold, says the government has missed a golden opportunity to reshape the system. Darlington hopes that hundreds of thousands of leaseholders waiting anxiously for these legislative changes will be freed from the knotty mess of extended waiting.
"In the meantime, many homeowners are stuck in properties that they cannot sell or remortgage," says Darlington.
The government is reportedly remaining tight-lipped about its hesitancy to push forward, as seven groups of freeholders have embarked on legal battles against the government, arguing that these reforms could violate their human rights.
"Leaseholders should not be subjected to further delay," adds Darlington. "The government needs to accelerate implementation for the portions that don't require further work or consultation, and immediately consult on those which do."
The National Leasehold Campaign expressed disappointment that more consultation is required, particularly on extension valuations. The group adds, "Now that we have an official government timeline to track, leaseholders will not forgive further delays or a weakening of the Law Commission's recommendations. This government will be judged by its actions, not its words."
So there you have it! The Labour leasehold reform saga continues to unfold, with much-anticipated changes on the horizon (or not so horizon-y) for leaseholders across the nation. Stay tuned as more details emerge and usher in a (hopefully) brighter future for leaseholders everywhere!
- The Draft Leasehold and Commonhold Reform Bill, as outlined in the King's Speech, aims to abolish feudal practices in leasehold ownership, including provisions for capping ground rents and outlawing insurance commissions charged by landlords, property managing agents, and freeholders.
- Amidst delays in implementing leasehold reforms, some critics question whether the government's hesitance is due to stubborn politics or a missed opportunity. Leasehold campaigners, like Linz Darlington of Homehold, assert that the government should accelerate the implementation of parts of the reform that don't require further consultation and immediately consult on those that do, to alleviate the plight of leaseholders eagerly awaiting these changes.
