The ongoing discussions around leasehold reforms in England and Wales have intensified, with recent announcements by the government highlighting a commitment to overhaul the “feudal” leasehold system that currently governs property ownership for millions. Amid concerns regarding the pace of these reforms, campaigners and leaseholders have expressed urgent needs for change. Housing Minister Matthew Pennycook has outlined a tentative timeline for these much-anticipated reforms, aimed at simplifying property ownership and reducing financial burdens associated with leasehold contracts.
Currently, millions of leaseholders own the right to use their properties for specific periods, often facing substantial annual ground rents that can amount to hundreds of pounds, not including additional service charges. Reform advocates see these financial obligations as outdated and detrimental, perpetuating a cycle of exploitation by freeholders, or landlords. During the announcement of the reform timeline, Pennycook emphasized that shifting toward a commonhold system—where individuals own their homes outright without the constraints of an expiring lease—would be a priority for the government before the next general election.
While the government’s alignment with the manifesto promises to abolish leaseholds has been generally welcomed, concerns remain about the sufficiency and timing of such reforms. Katie Kendrick, the founder of the National Leasehold Campaign (NLC), expressed cautious optimism that legislation would advance but stressed that it might not arrive quickly enough for the many existing leaseholders suffering under current regulations. Kendrick highlighted stories of people facing financial ruin due to escalated service charges and unregulated managing agents, accentuating a sense of urgency among affected individuals.
For the first time, the Housing Minister provided a detailed timetable for leasehold reform under the proposed Leasehold and Freehold Reform Bill. Notably, starting in January, the government intends to abolish the “two-year rule,” which has prevented leaseholders from extending their leases or purchasing freeholds for the initial 24 months after acquiring their properties. Beginning in spring of next year, additional reforms will allow more leaseholders in mixed-use buildings to assume management responsibilities from freeholders and protect them from bearing legal costs when making claims against their landlords. Furthermore, by mid-next year, the government aims to clarify plans to fully ban new leaseholds following this initial consultation period.
Another significant component of the reform process involves addressing unreasonable service charges; the government plans to offer leaseholders more robust avenues to contest these charges. Additionally, landlords may require court approval before imposing their legal costs onto leaseholders, adding another layer of protection for property owners. The transition from existing flats to a commonhold system will also be a focal point for the government.
Despite these promising announcements, skepticism remains. Some provisions of the 2024 Bill will not be implemented due to identified flaws. With around five million leasehold properties in England and Wales, the government recognizes the pressing need for reform, as many people have reported facing exorbitant service charges or issues regarding maintenance and repairs. Pennycook affirmed the urgency of addressing the “unfair and unreasonable practices” affecting leaseholders and freeholders alike.
The complexity of leasehold reforms has been acknowledged by several stakeholders, including Natalie Chambers, director of the Residential Freehold Association, who underscored the importance of collaboration with the government to realize practical reforms. Interestingly, Labour party pledges to abolish leasehold within a specified timeframe were dropped earlier this year, shifting the political landscape surrounding this pressing issue.
In addition, while reforms are primarily focused on England, the government has committed to working closely with Wales to ensure similar advancements. Scotland does not operate under a leasehold system, and Northern Ireland possesses a limited number of leasehold properties, marking the scope and specificity of the government’s focus. The recent government announcements have prompted increased discussions about the scale and implications of leasehold issues, reinforcing the need for urgent action among lawmakers and stakeholders in the housing sector.
