We (finally) have some clarity on the timetable for leasehold reforms. Here’s what we know so far.
First of all, the UK government has promised that, from January 2025, there will immediate access to extended leases for new leasehold owners. The current two-year brake on those applications will be removed. This should mean purchasers can apply to extend their lease terms as soon as they buy their property.
From Spring 2025, more residential leaseholders in mixed-use buildings (i.e., those with commercial premises within them) will be entitled to take over the management of their buildings.
More plans for 2025
By the second half of 2025, we’ll get an outline explaining more about how new leaseholds being created will be banned, and the intention to give effect to a new Commonhold regime to replace them. By next summer, work will have commenced on revising the valuation process and rates for existing leaseholders who want to extend their lease terms; an essential aspect of leasehold reform.
And by autumn next year, we can expect a new Leasehold & Commonhold Reform Bill to deal with the difficulties in the reform legislation that was rushed through parliament when the last government called the snap election earlier this year.
Good news for leaseholders challenging services charges
Ministers say they will also consult on how to make it easier for leaseholders to challenge unreasonable service charges, and to require landlords to get court approval before passing legal costs on to leaseholders.
The ministerial statement by Matthew Pennycook appears to set out an ambitious programme to overhaul a centuries-old system, albeit one which has been chipped away in recent decades via a patchwork of legislation. By setting a clear timeframe and acknowledging the need for further consultations, the government is demonstrating a commitment to addressing long-standing concerns in the leasehold system.
A response to calls for greater fairness and transparency
One key aspect that is being recognised is the complexity of leasehold legislation, which has long been a source of confusion and difficulty for both leaseholders and practitioners. By highlighting the need to address specific flaws, particularly with the valuation mechanism, the government is responding to calls for greater fairness and transparency in how leasehold properties are valued, especially when it comes to extending leases or buying freeholds.
For leaseholders and leasehold practitioners, this statement is reassuring as it suggests that the government is taking a methodical approach, consulting stakeholders to ensure that the reforms are effective and comprehensive. The proposed changes could help rectify some of the major issues faced by leaseholders, such as escalating ground rents and the often opaque and inconsistent methods used for lease valuations.
It’s fair to say that these points indicate a significant move towards reforming the leasehold and commonhold systems in the UK, addressing long-standing issues around lease extensions, management rights, and ownership structures.
Contact Sarich Khizer to discuss your leasehold enfranchisement requirements.
https://questions-statements.parliament.uk/written-statements/detail/2024-11-21/hcws244
The information contained in this article is general guidance only. The application and impact of laws can vary widely depending on the specific facts involved. The information in this article is provided with the understanding that the authors and presenters are not giving legal, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional legal, tax or other competent advisers. Before making any decision or taking any action, you should consult a Child & Child professional.
