Commitment to the Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 was passed on the last day of the previous government's term in office. The Act established an immediate ban on most new leasehold houses. However, only four other sections of the act were enforced. The dates for enactment of the remainder were left to the discretion of the next government.

The first four sections:

  • Section 113 – Regulation of remedies for rent charge arrears.
  • Section 117 – Recovery of legal costs through service charge.
  • Section 118 – Repeal of Section 125 of the Building Safety Act 2022 – meeting remediation costs of insolvent landlords.
  • Section 119 – Higher-risk and relevant buildings: notifications concerning insolvency.

Matthew Pennycook MP, outlined in a House of Commons debate that the government will move quickly to implement the remaining provisions of the Leasehold and Freehold Reform Act 2024 while committing to further reform during Labour’s tenure. This includes the enactment of the remaining Law Commission recommendations regarding:

  • Enfranchisement
  • Right to Manage
  • Unregulated and unaffordable ground rents
  • A new legal framework for commonhold
  • Ban on the sale of new leasehold flats

The UK Government set out in the King’s Speech its wider plan to rectify some concerns with the leasehold process. It is committing to draft legislation in 2024/2025 that will bolster leaseholders’ rights to extend their leases and the right to manage. The legislation will tackle currently unregulated ground rents, remove the threat of forfeiture, and restrict the sale of new leasehold flats moving towards commonhold as a default.

Whilst this is only a commitment to draft legislation, it is important to anticipate these changes, and Propertymark welcomes the commitment as we have lobbied for the change over the last five years.

We welcome this commitment but understand that implementing the remaining sections of the Act and the Law Commission's recommendations will be complex and require secondary legislation to outline finer details. We will continue campaigning for greater transparency around timescales and provide an update to members when we know more.

Cogs being put togther by business people
17 Jun 2024
Next Government must implement leasehold measures immediately

The Leasehold and Freehold Act received Royal Assent on 24 May 2024 and brought an immediate ban on most new leasehold houses. However, only four other sections of the Act are enforced which will come into effect on 24 July 2024.

Leasehold Research

Our latest report, Leasehold and Freehold Reform: Has Anything Changed? containing research from 2023 shows there are still concerns with property agents and consumers still experiencing difficulties with several areas relating to leasehold law.

Leasehold stats

72%
of agents believe homebuyers are more aware of issues surrounding leasehold property

60%
of buyers ask for information about the lease before they view a property.

78%
of agents said leasehold property with escalating ground rent will struggle to sell, even if priced correctly.

54%
of agents who sell property on behalf of developers report that they do not always provide the pertinent leasehold information.

Cladding stats

Agents report that
51%
of buyers ask about cladding before they view a property.

11%
of agents saying that buyers only ask after they have agreed to purchase a property.

16%
of agents reported that buyers only ask when banks make enquiries as part of the buying process.

Read the report

Property agents play a key role in supporting home buyers and sellers, so it is positive to see that consumer awareness about leasehold information has increased. However, increasing awareness is only one piece of the puzzle.

Policymakers must do more to create a level playing field with those who already own a leasehold property, make enfranchisement easier, simplify the process for lease extensions and where there is no managing agent, freeholders must sign up to a redress scheme.

Furthermore, as with sales, lettings and managing agents, for developers, there are no minimum standards to work in the sector and there are no statutory rules to ensure those buying and selling leasehold property are suitably qualified. As highlighted by the findings in our report a whole sector approach is needed to further protect consumers and bring about positive change for leaseholders.

Timothy Douglas Serious
Timothy Douglas Head of Policy and Campaigns | Propertymark

Leasehold training and resources

Download our leasehold FAQs (members only) or attend a training course to further understand leasehold legislation and what you need to do.

Propertymark's Understanding leasehold research
Understanding leasehold

This guide provides Propertymark estate agents with best practice on helping people buy and sell leasehold property. Estate agents have a level of responsibility under the Consumer Protection Regulations to pass on all material information in respect of a lease.

FAQ Leasehold houses with wooden panelling.jpg
FAQs: Leasehold Reform (Ground Rent) Act 2022

The Leasehold Reform (Ground Rent) Act 2022 restricts ground rents on newly created long residential leases for single dwellings such as a flat or house to a token one peppercorn per year, effectively restricting ground rents to zero financial value.

FAQ New build houses against grey sky.jpg
FAQs: Leasehold Reform

On 7 January 2021, the UK Government announced reforms with the intention of making it easier and cheaper for leaseholders to buy their homes in England.

Campaign successes

Over our years of campaigning to address the leasehold scandal, we have seen some legislative wins for leaseholders.

Campaigning from Propertymark helped lead to the introduction of the Leasehold Reform (Ground Rent) Act in June 2022, ending ground rent for most new long residential leases granted for properties in England and Wales.

In 2018, Propertymark provided evidence to the House of Common’s Housing, Communities and Local Government Committee’s Leasehold reform inquiry and the UK Government’s consultation on

making the leasehold market fairer. We were a member of the Welsh Government’s Task and Finish Group set up to reform the leasehold sector. Its report which identified failings in the leasehold system was released in July 2019.

In 2021, Propertymark’s research as published in our Leasehold: A Life Sentence report was quoted in Parliament by Baroness Andrews during Second Reading of the Leasehold Reform (Ground Rent) Bill to highlight issues around ground rents and unreasonable service charges.

New build estate looking at houses with balconies
27 Jun 2022
Leasehold changes take effect

The Leasehold Reform (Ground Rent) Act 2022 takes effect on 30 June 2022, ending ground rent for most new long residential leases granted for properties in England and Wales.


 

After lobby for its introduction as part of our work on leasehold issues, the UK Government introduced a New Homes Ombudsman via the Building Safety Act 2022.

Propertymark put forward proposals for an ombudsman scheme for purchasers of new build homes and for all new house builders sign up to the Consumer Code for Home Builders in our research, Leasehold: A Life Sentence.

We also outlined our concerns and put our proposals forward to the House of Commons Housing Communities and Local Government Committee inquiry into leasehold reform and the UK Government’s call for evidence into improving the home buying and selling process.

Bringing new homes under the scope of an ombudsman allows for a level playing field across the entire house buying process and will ensure the selling activities that developers are engaging in are of a consistently high standard.

Housing estate being built
10 Oct 2022
Ombudsman Service launches with Code for housing developers

Barratt, Taylor Wimpey, Redrow and Bellway are among 100 firms signed up to a new Code of Practice, following the launch of a new Ombudsman Service. The Code has been developed in response to growing pressure surrounding complaints from owners of new build housing that issues fail to be resolved effectively.