What is the Leasehold and Freehold Reform Bill?

For Sale sign outside residential building

The Leasehold and Freehold Reform Bill has been introduced to Parliament with plans to overhaul the system.

This includes proposals to make it easier and cheaper for leaseholders to buy their freehold, increase the standard lease extension term to 990 years for houses and flats, and offer more transparency around service charges.

This will be done by making freeholders and managing agents issue bills in a standardised format which can be more easily challenged and scruitinised.

It has also been put forward that leaseholders should have the option to take over the management of their property, rather than being limited to the freeholder’s choice. The government wants to make this process cheaper.

The bill also proposes to rebalance the legal costs and remove barriers that stop leaseholders from challenging their landlords over unreasonable charges at Tribunal. It will no longer be presumed that leaseholders will pay freeholders’ legal costs.

The government will also introduce reforms which extend access to redress schemes so it is easier and cheaper to get the necessary information required to sell a leasehold property. This will be open to homeowners of private and mixed tenure properties, while freeholders will be required to be part of a scheme.

The government wants to give more rights to tenants in mixed use blocks of flats so leaseholders can take over the management or buy the freehold if the commercial floor space makes up to 50 per cent of the block. Currently, these rights are limited if the commercial aspect of a property is at least 25 per cent of the block.

A ban on the sale of new leasehold houses except for in certain circumstances, as well as a ban on opaque and excessive buildings insurance commissions for freeholders and managing agents has been proposed.

The government also wants to ban the requirement that a new leaseholder can only purchase or extend their lease once they have owned their property for two years.

A consultation to cap ground rents on existing leases is also underway and will close 21 December.

Liberating leaseholders

Michael Gove, Secretary of State for Levelling Up, said:

“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 But for far too long too many have been denied the full benefits of ownership through the unfair and outdated leasehold system.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.”

If your UK property is affected by these proposals and you’re looking for advice on the impact, please get in touch.

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