The long awaited, and now part enacted, reform to leasehold rights has seen a further development in the statement of Matthew Pennycook, Minister of State for Housing and Planning, on 21 November 2024.
The statement sets out the plans for reform for 2025, which involves further piecemeal and staggered advancements. These include:
- The 2-year rule to qualify for a statutory lease extension is to be abolished in January 2025,
- Provisions expanding the Right to Manage are to come into force in spring 2025,
- A consultation on implementing the provisions in the Leasehold and Freehold Reform Act 2024 on service charges, legal costs and a ban on insurance commissions
- Certain identified shortcomings in the Leasehold and Freehold Reform Act 2024 are to be addressed including shared ownership leaseholder rights to extend,
- A consultation on valuation rates used to calculate the cost of enfranchisement premiums in summer 2025,
- A Commonhold white paper to be published early 2025; and
- Consultations on a ban on new leasehold flats and the regulation of managing agents.
The statement appears to recognise the need for Government to take a considered approach, which is sensible given the scale of the task. However, there is little in the way of provisions coming into force imminently for leaseholders to take advantage of.
One of the most significant issues is as to the new valuation regime and its effect on premiums payable for lease extensions and freeholds, the details of which are now further in the distance. This will now be given proper scrutiny but it will do so against the backdrop of the judicial review challenges to the 2024 Act, to be initially heard in early 2025. At this stage we still do not have the details on the right to a 990 year lease extension, the abolition of marriage value, capping of ground rents, or the abolition of costs recovery in enfranchisement claims.
What is certain is that the abolition of leasehold and reinvigoration of commonhold will be a hot topic in 2025. In order to deliver such a fundamental change in tenure, Government will need to get the property industry comfortable with embracing a form of ownership that was created over 20 years ago and wasn't taken up for a variety of reasons.
