The UK’s leasehold system has long been a contentious issue for property owners, with high ground rents, restrictive lease terms, and limited control over management decisions. However, the government is introducing reforms to change this, aiming to provide leaseholders with greater rights and protections. As an estate and lettings agent, I want to break down what these changes mean for buyers, sellers, and landlords.

What’s Changing Under the New Reforms?

The Leasehold and Freehold Reform Act 2024 (Commencement No. 3) Regulations 2025 introduce key changes that will take effect on 3 March 2025. These include:

• Increased Right to Manage (RTM) Access – Leaseholders in mixed-use buildings will benefit from the non-residential limit increasing from 25% to 50%, making it easier to take control of their building’s management.

• Reduced Costs for Leaseholders – Freeholders will have fewer opportunities to charge leaseholders excessive fees for legal processes.

• Simplified Tribunal Process – Certain disputes will be handled by tribunals rather than requiring applications to the High Court, making the process more accessible.

• Fairer Leasehold Costs – Restrictions on landlords recovering non-litigation costs from leaseholders will provide better financial protection.

These reforms are designed to make leasehold ownership more transparent, fairer, and less financially burdensome for homeowners.

For full details, you can view the official legislation here: Leasehold and Freehold Reform Act 2024

What Does This Mean for Buyers, Sellers, and Landlords?

For Buyers:

• Leasehold properties may become a more attractive option, especially with reduced costs and increased control.

• Those purchasing leasehold homes will benefit from improved rights regarding service charges and management decisions.

• Buying a property with a lease extension will be more straightforward, making long-term investments in leasehold properties more secure.

For Sellers:

• Easier Lease Extensions – The reforms will make extending leases more affordable, making leasehold properties more appealing to buyers.

• Increased Market Demand – With fairer leasehold terms, more buyers may consider leasehold properties, potentially leading to quicker sales.

• Higher Property Values – As leasehold conditions improve, properties may see an increase in market value, making them easier to sell.

• Smoother Transactions – Simplified tribunal processes and fairer cost structures can reduce disputes that might delay sales.

For Landlords:

• These changes could affect the valuation and rental appeal of leasehold properties.

• Landlords may need to adapt to new management structures if leaseholders take control of a building.

• Service charges and ground rent terms may need to be reviewed to ensure compliance with the new rules.

For further details, see the UK Government’s guidance: Understanding Leasehold and Freehold Reform

What About Commonhold?

While leasehold reform is a major focus, the government is also looking to revive commonhold, an alternative system where homeowners own their flats outright without a lease.

In a commonhold setup:

• Owners directly own their flats with no time limits.

• Shared spaces (like hallways and gardens) are managed collectively by a commonhold association.

• There are no freeholders, meaning homeowners are in control rather than being subject to external management.

Despite its advantages, commonhold has been slow to gain traction in the UK due to developer resistance and financial challenges. However, the government is pushing for reforms to make it a more viable option. You can read more about the commonhold system here: Commonhold Explained

Final Thoughts

The Leasehold and Freehold Reform Act 2024 is a step towards a fairer property system. While challenges remain—particularly with transitioning to commonhold—these changes will empower leaseholders and reshape the UK’s property landscape.

Whether you’re looking to buy, sell, or manage a leasehold property, staying informed is crucial.

For further reading, visit the UK Government’s official leasehold reform updates: Leasehold Reform News