On 21 November, housing minister Matthew Pennycook published a written statement on leasehold and commonhold reform, covering provisions under the Leasehold and Freehold Reform Act 2024 as well as a number of new measures.
Implementation of 2024 Act set to continue
When the 2024 Act was passed in May, only the measures relating to building safety took effect. The housing minister's statement covered several of the act's other provisions, including:
- the removal of a two-year restriction on enfranchisement and lease extensions, which will commence in January
- consultation on introducing permitted insurance fees for landlords, freeholders and property managing agents, which was published on 2 December
- increasing access to the right to manage for leaseholders in mixed-use buildings from next spring, alongside reforming costs and voting rights
- consultation on the valuation rates used to calculate the cost of enfranchisement premiums, which is due next summer; implementation of any subsequent measures will take time, needing secondary legislation as well as amendments to existing, primary legislation
- consultation on new consumer protection provisions for homeowners on freehold estates, and on service charges and legal costs.
Government proposes further reforms
The written statement also contained several measures that the government has said it will introduce.
- A draft leaseholders and commonhold reform bill will be published in the second half of next year, as part of which the government will consider further reforms to the leasehold system.
- There will be changes to ground rents, which will be made through legislation. Consultation on these was carried out under the previous government, but it is anticipated that further consultation will be undertaken before the reforms.
- Forfeiture will be removed as a way of ensuring compliance with a lease agreement.
- New reforms to section 20 of the Landlord and Tenant Act 1985 will be consulted on.
- A white paper on reforms to commonhold will be published in early 2025, as well as a consultation on banning new leasehold flats. The Ministry of Housing, Communities and Local Government (MHCLG) will be looking for input from property professionals and consumers.
- The MHCLG will look again at Lord Best's report on the regulation of property agents. It aims to strengthen such regulation, including – as a minimum – mandatory professional qualifications, and will consult on this next year.
- The MHCLG will also consult on options to reduce private estate management arrangements.
While the ministerial statement has clarified for leaseholders and professionals what the MHCLG's priorities are, it will still take time to conduct the consultations announced and implement requirements for further secondary and new primary legislation.
RICS will engage with the ministry on the proposals and respond to all relevant consultations. As and when we have more information, we will publish updates on the Leasehold Reform Hub.
In the meantime, if you would like to find out more about our work in this area then please contact RICS' standards team.