If you own a flat in a block managed building or you’re an investor weighing up a leasehold purchase this autumn is worth paying attention to.
The government is preparing to bring the Commonhold and Leasehold Reform Bill before Parliament and it’s shaping up to be the most significant shake up of leasehold law in a generation.
The Leasehold and Freehold Reform Act 2024 was passed by the previous government but large parts of it are still sitting on the shelf waiting for secondary legislation before they can actually take effect.
Ministers have said the new Bill will “couple” the two pieces of legislation together meaning much of the 2024 Act won’t be switched on until the new Bill has also been passed.
In practice that means leaseholders hoping for quicker or cheaper lease extensions have had a longer wait than expected.
A few proposals are worth flagging for anyone with a stake in a block managed building:
Ground rent caps. Ground rent on existing leases would be capped at £250 a year tapering down to a token “peppercorn” amount after a 40 year transition.
Full implementation of the cap is expected to land around late 2028 subject to Parliament’s approval.
Cheaper lease extensions. The Bill aims to remove “marriage value” from the calculation used to price lease extensions and freehold purchases a change that should make extending a short lease meaningfully cheaper particularly for flats under 80 years.
Longer terms, less risk of forfeiture. Standard lease extensions would move to 990 years up from the current 50 (houses) or 90 (flats) with the threat of forfeiture losing your home over a disputed debt replaced with something more proportionate.
A push towards commonhold. The government wants commonhold where residents jointly own and run their building to become the default tenure for new flats effectively phasing out new leasehold sales over time.
Two related consultations on the valuation rates used to calculate enfranchisement premiums and on who pays the legal costs of these disputes are both due to close on 23 September 2026.
The rates consultation in particular has already been delayed once by legal challenges and a group of freeholders has now been given permission to appeal an earlier court ruling against them with a deadline of April 2027 for that appeal to be heard.
Realistically that means some of the most consumer friendly parts of this reform are unlikely to bite until 2028 at the earliest.
If you’re an investor it’s worth treating any leasehold purchase decision with the direction of travel in mind, shorter leases and higher ground rents are becoming a bigger liability not a smaller one as reform edges closer.
If you’re a leaseholder or tenant in one of our managed buildings; none of these changes are retrospective or automatic they’ll need secondary legislation and Parliamentary time before they apply to you.
We’ll keep tracking the Bill’s progress and let you know as soon as anything is confirmed that affects your building specifically.
In the meantime if you have questions about your lease, service charges or what any of this might mean for your particular building get in touch with our team we’re here to cut through the noise.
Click here to contact one of our friendly team who will be happy to help
