On 21st November 2024 Housing Minister Matthew Pennycook gave an update to Parliament on this area of law pledging to bring leasehold to an end and to implement the changes enacted by the Leasehold and Freehold Reform Act 2024 (the Act). Has he kept his promises? Well yes and not yet…..
An end to the 2 year wait to extend flat or house leases
This change has been brought in. However, the right to apply to extend a house or flat lease arises on registration of ownership at the Land Registry. As many will know, applications for registration can take as long as 2 years thereby putting the owners back in the same position.
Land Registry have been asked to confirm that an intention to apply to extend a lease is an acceptable reason to apply to speed up an application for registration and we wait to hear on this.
RTM changes
Again, another tick:
- Increase access to the Right to Manage
Buildings with up to 50% non-residential floor space can now qualify for a RTM claim, a significant increase from the previous 25% limit. This means many more buildings with a mix of residential and commercial uses, like shops and offices, can now be managed by leaseholders.
- Reduced financial burden on leaseholders:
Leaseholders making an RTM claim will no longer be required to cover the freeholder’s legal costs, unless the claim is withdrawn or deemed invalid. This removes a significant financial barrier to exercising the RTM.
Freeholders are also prohibited from including non-litigation costs related to the RTM claim in service charges, further protecting leaseholders from punitive costs.
- Amendments to RTM company model articles:
The RTM Companies (Model Articles) (England) (Amendment) Regulations 2025 have been introduced, limiting the voting power of landlords in RTM companies. Specifically, landlords’ votes are capped at one-third of the total votes exercisable by qualifying tenants, ensuring leaseholders have a greater say in the management of their buildings and landlords can’t continue to cause management headaches for the leaseholders.
And some more changes still to come…
In March 2025 the government committed to:
- Reinvigorate commonhold, a radical improvement on leasehold ownership
- Ban the sale of new leasehold flats as the government takes steps to honour its manifesto commitment to ensure commonhold becomes the default method of flat ownership
Also in March 2025 the government published its proposed reforms to commonhold and its proposals to deal with the conversion of existing leasehold blocks.
What next?
- In the later part of this year the government will publish the draft Leasehold and Commonhold Reform Bill
- An extensive consultation process will follow
- Once the consultation process is complete the actual Bill will be published
- The Government will then consult on the proposal to ban the sale of new leasehold flats
- In his announcement in November Matthew Pennycook also stated that before the end of 2025 the government will consult with stakeholders and delivery partners on bringing in further changes set out in the Leasehold and Freehold Reform Act 2024 and how they will operate, including:
- a ban on buildings insurance remuneration;
- changes to the valuation rates used to calculate the price payable to extend a lease or buy the freehold of a block;
- new consumer protection provisions for homeowners on freehold estates; and
- increasing service charge transparency and decreasing legal costs paid by leaseholders.
There is a clear commitment by government to revitalise commonhold by the end of this parliament and ultimately to bring leasehold to an end. Many have tried, will this government succeed?
To learn more about the reform, please contact us on 0345 646 0406 or complete our online enquiry form and a member of our Team will be in touch.