The government is ushering in substantial reforms to the leasehold system, promising enhanced  rights and protections for millions of homeowners in England and Wales. Housing Secretary Michael Gove has presented the Leasehold and Freehold Reform Bill to Parliament, aiming to streamline the process of acquiring freehold, extend standard lease terms to 990 years for both houses and flats, and offer better transparency regarding service charges.

Additionally, the Bill seeks to rebalance the legal costs regime and eliminate obstacles that leaseholders face when challenging their landlords’ unreasonable charges at Tribunal. These changes mark a significant step towards a more accessible and fair leasehold system, addressing various concerns and empowering homeowners across the country.

The new measures will enable more leaseholders to take control of managing their property, offering an alternative to the freeholder’s management choice. The government aims to streamline this process, making it more cost-effective for leaseholders. Additionally, upcoming reforms will expand access to redress schemes and simplify the process of obtaining information for selling a leasehold home.

According to Gove, these changes are part of the government’s commitment to addressing the issues in the leasehold system. The goal is to ensure that homeowners can fully benefit from property ownership without facing the limitations of an unfair and outdated system. This effort aligns with the government’s Long-Term Plan for Housing.

This marks a momentous occasion for millions of leaseholders across the country as the government unveils legislation to usher in substantial new rights and protections. The proposed laws aim to significantly reduce unfair costs and curb exploitative practices in the housing market.

At its core, the Bill addresses a persistent challenge that the country has grappled with — ensuring fairness in the housing market. The measures embedded in the legislation are poised to set the nation on a trajectory towards a more balanced future by rectifying historical imbalances between leaseholders and freeholders. The overarching goal is to provide homeowners with a fairer deal, enhanced protections, and expanded rights.

This legislative move is not just a response to immediate concerns but signifies a commitment to fostering a housing environment that stands the test of time. By focusing on the dynamics between leaseholders and freeholders, the government aims to instill a sense of equity that will resonate in the housing market for years to come.

He claims the Bill will strengthen existing, and introduce new, consumer rights for homeowners by:

• Simplifying the process and reducing costs for leaseholders to extend their lease or buy their freehold, providing more affordable and secure home ownership.
• Increasing the standard lease extension term to 990 years for both houses and flats, eliminating future extension hassles and expenses for leaseholders.
• Enhancing transparency by standardizing service charge bills, empowering leaseholders to scrutinize and challenge charges more easily.
• Streamlining the process for leaseholders to take control of building management, enabling them to choose their managing agent at a lower cost.
• Reducing costs for leaseholders exercising enfranchisement rights by eliminating the need to pay the freeholder’s expenses during the claim process.
• The government plans to broaden the reach of redress schemes, enabling leaseholders to contest poor practices. It mandates that freeholders directly managing their building must be part of a redress scheme, a requirement already imposed on managing agents.
• Streamlining the process of buying or selling a leasehold property, the government proposes establishing a maximum time and fee for obtaining home buying and selling information.
• Homeowners in private and mixed tenure estates will be endowed with extensive redress rights. This includes receiving more detailed information about the charges they incur and the ability to challenge their reasonableness.

The government plans to enhance the rights of individuals residing in mixed-use blocks of flats. Currently, if over 25% of the floor space in such buildings is commercial, like shops or offices on the ground floor, leaseholders are restricted from taking control of the site’s management or purchasing its freehold.

The proposed change involves raising the floor space limit to 50%, expanding the access of more leaseholders to the Right to Manage or the right to collective enfranchisement.

Additionally, the government aims to standardize the rights of residents in freehold estates. This entails granting freehold homeowners on private and mixed tenure estates equivalent rights of redress as leaseholders and similar transparency rights regarding their estate charges.

The Bill will also rebalance the housing system for leaseholders by: 

• Abolishing the assumption that leaseholders bear the legal costs of their freeholders when contesting poor practices, removing a current deterrent for challenging service charges;
• Prohibiting unclear and excessive commissions for buildings insurance for both freeholders and managing agents, introducing transparent and equitable handling fees instead;
• Prohibiting the sale of new leasehold houses, ensuring that, with few exceptions, all new houses in England and Wales will be freehold from the start;
• Eliminating the prerequisite for a new leaseholder to possess their house or flat for two years before being able to extend their lease or purchase their freehold.

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