The leasehold system in England has long been regarded as inherently flawed, yet recent government actions suggest a misguided confidence in superficial fixes rather than genuine reform. The Leasehold and Freehold Reform Act 2024 (LAFRA), enacted amidst hurried political posturing, claims to address some of the system’s most glaring issues—such as reducing premiums for lease extensions under 80 years and boosting lease extension terms to 990 years. It also promises increased transparency around service charges and expands rights for buildings to qualify for the Right to Manage (RTM), notably raising the commercial property limit from 25% to 50% in mixed-use developments. But these piecemeal measures merely scratch the surface of a deeply entrenched problem and do little to resolve the underlying tensions within the system.
What’s truly alarming is that much of this legislation remains unimplemented, pending secondary legislation and further reforms teased in the upcoming Leasehold and Commonhold Reform Bill. This legislative limbo creates unnecessary uncertainty, undermining confidence among conveyancers, leaseholders, freeholders, developers, lenders, and managing agents alike. A recent industry practitioner rightly warns that the sector needs stability and thoughtful implementation—not another round of rushed, politically driven reforms that destabilize the market further. The current environment—marked by unclear valuation rules, partial reforms, and debates over ground rent caps—has already sown confusion and eroded market confidence, hindering meaningful housing transactions.
Although leasehold ownership still comprises roughly 20% of all homes in England—with proportions soaring in London—such figures highlight how pervasive and entrenched this flawed system remains. While it does offer mechanisms such as enfranchisement and no-fault management, these are often exploited, and the system’s complexities serve as barriers to genuine reform. Rushing towards a wholesale abolition—such as the government’s preferred promotion of commonhold—ignores the reality that mortgage lenders remain cautious, developers lack the incentives to transition, and existing managing agents are predominantly familiar with leasehold practices. A forced march toward commonhold, without proper testing and transition frameworks, risks stifling housing delivery and introducing unforeseen market risks. Pragmatic reform advocates call for a phased approach, carefully tested on manageable scales, with guidance from lenders and clear, enforceable regulations.
The government’s latest updates claim to remove the two-year ownership requirement by January 2025 and expand RTM rights within mixed-use buildings by spring 2025. Additional consultations on banning building insurance commissions and regulating service charges, legal costs, and premiums are set for later in 2025. The proposed Leasehold and Commonhold Reform Bill, expected in the latter half of this parliamentary session, aims to establish commonhold as the default tenure. However, these ambitions risk being little more than political lip service unless accompanied by careful, stakeholder-driven implementation.
Sadly, this titanic push for reform is often oversimplified as a binary battle between leaseholders and freeholders—misleading and dangerous. Many existing arrangements function effectively, with proper management and fair charges, provided that those involved operate transparently. Instead of catastrophic wholesale dismantling, targeted interventions against exploitative practices—such as excessive charges and unfair lease terms—would deliver tangible benefits without destabilizing the entire housing market. A wholesale abolition of leasehold, as some political ambitions suggest, is both impractical and risky—especially considering the millions of existing leases that would require complex transition processes.
The fallout from poorly managed reforms is already evident. Political shifts, regulatory uncertainties, and media speculation have sown doubt among buyers and lenders alike, dampening economic confidence in the housing market. Conveyancers are left navigating uncharted legislative waters, facing difficulty in providing clear advice to anxious clients. Industry experts have consistently warned that reform should not come at the expense of stability—a warning that appears to have been ignored by policymakers rushing through untested proposals.
In conclusion, any lasting improvement in leasehold law depends on deliberate, carefully managed reform—not hurried legislation driven by political expediency. Real change will require collaboration, clarity, and stability—principles often overlooked in today’s political environment. As the current government pushes ambitious reforms with a flash of enthusiasm, Britain’s housing sector must guard against long-term destabilization, with careful measures that restore trust and ensure growth—rather than risking a repeat of past missteps that could hobble the housing market for generations to come.
Source: Noah Wire Services