Back to Blog

Proposed changes to the Leasehold Reform Bill

Posted 25/03/2024 by Reeds Rains
Categories: Landlords/Lettings
Keys in door

There has long been calls for leasehold reform, not least because for too many years owners of leasehold properties have felt at times that they have been at the mercy of freeholders when it comes to service charges, ground rent increases, the cost of lease extensions and restrictive clauses and covenants.

This has been a particular issue with new build leasehold homes, where developers have retained the freehold rights and then sometimes sold the freehold to a third party, some of whom have massively increased the ongoing costs for residents.

What steps have been taken so far?

Over 20 years ago, ‘commonhold’ was introduced, where the owners of properties that that would traditionally be leasehold, such as flats in blocks, own a share of the freehold. In this case, there is no external freeholder, so all decisions on costs, etc., are decided by the property owners’ management committee.

However, since the legislation came into force, fewer than 20 commonhold developments have been established, so this is something that the Government is keen to reinvigorate.

On 30th June 2022, the Leasehold Reform (Ground Rent) Act came into force, restricting ground rent on new leases to a ‘peppercorn’ rent, effectively zero. For lease extensions, the current ground rent continues until the end of the old lease period, then reverts to zero.

While this was seen as a positive step, it did nothing to address ground rent on existing leases.

Concerns from across the property industry about the negative aspects of leasehold as it currently stands in law, led to the Leasehold and Freehold Reform Bill (for England and Wales) being announced in the Kings Speech on 7th November last year.

King Charles stated it would, “make it cheaper and easier for leaseholders to purchase their freehold and tackle the exploitation of millions of homeowners through punitive service charges.”

However, the changes were focused on future, rather than existing leaseholders, and the ban on new leasehold property was set to apply only to houses, not flats.

A consultation was opened on 9th November, setting out a series of options for how the government could intervene to cap the ground rent leaseholders have to pay. The consultation closed on 17th January and feedback is currently being analysed.

Meanwhile, the Bill is progressing quickly. It was formally introduced in the House of Commons on 27th November, with a second reading on 11th December, and twelve Committee Stage sittings took place between 16th January and 1st February this year.

What are the key changes proposed in the Leasehold Reform Bill?

The key proposals currently in the draft Bill are to:

  • Make it cheaper and easier for leaseholders to extend the lease or buy the freehold
  • Increase the standard lease extension term from 90 to 990 years
  • Scrap the requirement for leaseholders to have owned their property for at least two years before they can benefit from the above changes
  • Set a time limit for the freeholder to provide the necessary information when requested, to speed up the buying and selling process
  • Give leaseholders access to redress schemes so they can challenge poor practices, and remove the presumption for leaseholders to pay their freeholders’ legal costs in such a case
  • Take steps to ensure freeholders and developers cannot escape their liabilities to fund remediation work, as per the Building Safety Act 2022
  • Increase the maximum amount of non-residential floorspace in a building at which leaseholders can buy their freehold or take over the building management, from 25% to 50%.
Following the Committee Stage, the Government proposed a total of 124 amendments, the majority of which were minor and/or technical, and all were accepted. The most substantial additions relate to estates and include:

1. New redress schemes to be introduced for leaseholders and freeholders on private or mixed-tenure estates, and

2. Measures to ensure that relevant property sales information is provided to leaseholders and freeholders on estates in a timely manner.

When might the Leasehold Reform Bill be implemented?

As with so much proposed legislation, the biggest factor in terms of timing is the upcoming General Election. Although a date has yet to be announced, this has to take place before 28th January 2025.

Given the speed at which the Bill has reached the Third Reading stage, it is entirely possible that it could be passed in the next few months.

One Royal Assent has been granted, the implementation of changes will be timetabled. This is in stark contrast to the Renters (Reform) Bill which seems to be stuck in the system.


If you currently have, or are thinking of investing in a leasehold property, we are always here to help. Just contact your local branch via phone, email or in person, and our lettings experts will be happy to have a chat.

One of our local lettings experts can give you a free no-obligation lettings consultation at a time that suits you.

Book a free lettings consultation

The Reeds Rains Content Marketing Team

Signup for Updates

Get the latest news from Reeds Rains direct to your inbox

Signup for Updates

Get the latest news from Reeds Rains direct to your inbox