Leasehold Reforms Set to Empower Homeowners in England and Wales

In a significant legislative move, the Leasehold and Freehold Reform Bill, introduced to Parliament today, is poised to bring about the most substantial changes to the leasehold system in recent history, offering millions of homeowners in England and Wales enhanced rights, powers, and protections.

The Bill is a critical component of the Government’s Long-Term Plan for Housing. It aims to streamline the process for leaseholders to purchase their freehold, extend lease terms to 990 years for both houses and flats, and bolster transparency concerning service charges. Additionally, it seeks to adjust the legal costs regime and facilitate leaseholders’ ability to contest unreasonable charges at Tribunal.

The proposed legislation also aspires to make it more affordable and straightforward for leaseholders to manage their properties, rather than being confined to the choices of the freeholder.

Further reforms are on the horizon, including extending access to redress schemes and simplifying the process of obtaining necessary information for selling leasehold homes.

Housing Secretary Michael Gove commented on the bill’s introduction: “People work hard to own a home. But for far too long too many have been denied the full benefits of ownership through the unfair and outdated leasehold system. That’s why liberating leaseholders forms a vital part of the Government’s Long-Term Plan for Housing. So today marks a landmark moment for millions of leaseholders across the country, as we unveil laws to deliver significant new rights and protections, slash unfair costs and crack down on exploitation.”

The bill’s key measures include making lease extensions or freehold purchases cheaper and easier, standardizing lease extensions to 990 years, ensuring more transparency in service charge billing, and facilitating easier management takeovers by leaseholders. It also includes abolishing leaseholders’ obligation to pay freeholder’s costs in claims, extending access to redress schemes, and streamlining the process of buying or selling leasehold properties.

The Government is also taking steps to enhance the rights of those in mixed-use blocks and residents of freehold estates, offering them the same level of redress and transparency as leaseholders.

The bill aims to rebalance the housing system for leaseholders by removing the requirement for leaseholders to bear their freeholders’ legal costs in disputes, limiting building insurance commissions, prohibiting the sale of new leasehold houses, and removing the two-year ownership requirement for lease extensions or freehold purchases.

This bill, forming part of the Government’s housing strategy, adheres to its manifesto commitments on leasehold reform. Some measures will be introduced at first reading, with others added as amendments during the parliamentary process. These will include changes to the Building Safety Act 2022 to ensure accountability for building safety defects and balance leaseholder protections.

Additionally, the Government is consulting on options to cap ground rents for existing leases, aiming to protect leaseholders from unregulated ground rents without corresponding services. The consultation will conclude on 21st December, with the Government’s response to follow shortly.