Leasehold and Freehold Reform Bill introduced to Parliament

The Leasehold and Freehold Reform Bill was introduced to Parliament on 27 November 2023, the Department for Levelling Up, Housing and Communities said, setting out changes to leasehold law in England and Wales¹. The department said the Bill "will make the long-term and necessary changes to improve homeownership for millions of leaseholders in England and Wales"¹.

The measures cover lease extensions, freehold purchase and management. The standard lease extension term for houses and flats would rise to 990 years, from 90 years in flats and 50 years in houses, with ground rent reduced to a peppercorn, meaning zero financial value, on payment of a premium¹. The so-called "marriage value", which the department says makes extending a lease more expensive when it is close to expiry, would be removed, as would the requirement for a new leaseholder to have owned their house or flat for two years before using these rights¹. The 25% non-residential limit, which stops leaseholders in buildings mixing homes with shops or offices from buying their freehold or taking over management, would rise to 50%¹.

On costs and information, the Bill would set a maximum time and fee for a freeholder to provide information needed to make a sale, and require service charge information in a standardised, comparable format¹. Buildings insurance commissions for managing agents, landlords and freeholders would be replaced with transparent administration fees¹. Freeholders who manage their own property would have to belong to a redress scheme, and the presumption that leaseholders pay their freeholders' legal costs when challenging poor practice would be scrapped¹. Freehold homeowners on private and mixed tenure estates would get the same rights of redress as leaseholders, including over estate charges¹.

The Bill also builds on the Building Safety Act 2022, with the department saying it would ensure freeholders and developers cannot escape liabilities to fund building remediation work¹. The sale of new leasehold houses would be banned, so that, other than in exceptional circumstances, every new house in England and Wales is freehold from the outset¹.

Source: Guide to the Leasehold and Freehold Reform Bill¹

The department said the Leasehold Reform (Ground Rent) Act 2022, which ended ground rents for most new qualifying long residential leases in England and Wales, "formed the first part of the government's programme of leasehold reform"¹. It said the government asked the Law Commission to review certain areas of leasehold law in 2017¹.

Why it matters for households

The measures apply to England and Wales¹. For leaseholders, the changes would affect the cost and length of a lease extension, the price of buying the freehold and the ability to take over management of a building, and would remove the two-year ownership wait¹. Service charge information would have to be provided in a standardised format, and insurance commissions would be replaced by administration fees, which affects what leaseholders are charged and what they can see¹. Freeholders who manage their own property would have to join a redress scheme, and leaseholders would no longer face the presumption of paying their freeholder's legal costs when challenging poor practice¹. Freehold homeowners on private and mixed tenure estates would gain equivalent rights over estate charges¹. The ban on new leasehold houses would apply to new houses sold in England and Wales, other than in exceptional circumstances¹.

What happens next

The Bill was introduced to Parliament on 27 November 2023¹. Its passage through Parliament, and the dates on which any measures take effect, have not been reported in the guidance¹.