Leasehold and Commonhold reform – latest update 28 February 2025

The government has given an update as to the implementation of the leasehold and freehold reform act 2024. The minister for housing and planning, Mathew Pennycoock, has outlined the government‘s position on the timing of the introduction of the various parts of the bill.

Pennycook said that Leasehold is to be brought to an end by the end of this parliament which would mean the full introduction of commonhold and the end of any future leases. It was not clear what this meant for current leases although retrospective action to eliminate all leases seems to be far-fetched.

There was no timescale given for the remediation to service charges and liability for landlords costs other than to say “they will be brought in as quickly as possible.”

Most importantly the governments position on valuation methods in the new act and the continuation or not of marriage value has no real timetable or certainty. The current government blames the Conservatives for serious flaws in the legislation and that labour would need to fix those floors through primary legislation at the earliest opportunity.

The abolition of the two year rule took place on the 23rd of January 2025 and came into effect on the 31st of January 2025. This allows leaseholders to extend their leases immediately without having to wait for two years as was the case under the 1993 act. Those undertaking collective enfranchisement or freehold purchases of course were never subject to the two year rule in any event. The two year rule was circumvented in many cases by assignment of the notice from the vendor of the property and therefore was not an insurmountable hurdle. So not as signiticant change as it appears. Another example of the Government tinckering around the edges rather than implementing proper reform.

Future changes to the right to manage process (RTM) are scheduled for spring 2025 and these are aimed at make it easier for leaseholders, especially of mixed use buildingsk, to take over the Management. Other reforms to RTM include abolition of leaseholders obligation to pay the freeholder legal costs and to make the whole process cheaper.

Future developments in 2025 are likely to cover the capping of ground rents and simplification of the enfranchisement process. The government is pursuing commonhold with additional reforms expected to bring this into action however the main aspects that will affect both leaseholders and freeholds freeholder namely the valuation methodology and abolition or not of ground rent still wait for any concrete timetable or direction. The end result is further delay and leaseholders having to wait for further legislation to be passed, which may or may not happen.

In conclusion – no real change or certainty as is to be expected from a dreadful piece of rushed and flawed legislation.