People who own homes in England and Wales have been unhappy with the leasehold system for a long time. Many of them have to pay high service fees and have little control over their homes.
The UK government has promised to get rid of leasehold flats before the end of this parliament term because many people are unhappy with them. More rights for landlords and a more fair way to own a home are the goals of the new changes.
The Government’s Commitment to Leasehold Reform
Matthew Pennycook, the housing minister, has said again that the government wants to get rid of the leasehold system. He says it’s an old method from the Middle Ages that doesn’t work for modern houses.
There is a pressing need for change because about 5 million homes in England are under rental deals. Ministers are aware of how slowly things are moving and have come up with a number of ideas to speed up the process of switching to commonhold ownership.
A new leasehold reform bill is likely to be based on the future commonhold white paper. This bill will probably include a rule that developers can’t sell brand-new leasehold apartments.
Key Provisions in the Leasehold and Freehold Reform Act 2024
On May 24, 2024, the Leasehold and Freehold Reform Act 2024 was signed into law by the queen. This law builds on what the Conservative government said it would do in its housing white paper in 2017 and adds ideas from the Law Commission’s 2020 reports.
The act has been passed, but many of its parts have not yet become law. As promised, the Labour government will push through the changes as quickly as possible while making sure that all the right legal steps are taken.
Key Actions Taken So Far Include:
- Beginning a poll to find ways to make leaseholders’ understanding of building insurance costs better (ending on February 24, 2025).
- Making rules that will let people who rent land extend their lease or buy it without having to wait two years first, starting on January 31, 2025.
- The Right to Manage (RTM) method will change on March 3, 2025, so that more leaseholders can apply and renters will no longer have to pay the freeholders’ court fees in RTM cases.
Impact on Leasehold Flats
The housing market will change a lot when leasehold flats are taken away. This is because homeowners will no longer be limited by lease deals and will have full ownership rights.
Under the planned commonhold system, building owners will work together to run their properties, getting rid of the need for outside freeholders who often charge high fees and put strict rules on residents.
Leasehold flat owners have been complaining for a long time about unfair service charges and rising ground rents. The new rules will make things clearer and give renters more control over their houses, which will fix these issues.
Leasehold Reform in Wales
England and Wales both use the leasehold method, but the rules are a little different between the two. Long-term residential leaseholds in Wales are already covered by the Leasehold Reform (Ground Rent) Act 2022, which stops owners from charging unfair ground rents.
The Welsh Government has also promised to follow the Law Commission’s advice on how to change leasehold laws. There is now a Leasehold and Freehold Reform Act 2024 in Wales.
Extra laws are likely to be made to make sure it is fully put into effect. The Welsh Government says in its Program for Government 2021–26 that it will deal with leasehold issues as part of bigger changes to how people own land.
Conclusion
Getting rid of rented apartments is a big change for the UK housing market. Even though the voting process is still going on, it is clear that the government wants to make changes.
There will soon be a more fair system that puts homeowners’ rights first, makes it easier for them to pay their bills, and makes it clearer what it means to own a home.
Before the new rules take effect, leaseholders were only able to control parts of their homes. With the new rules in place, they will be able to fully control their homes.