Matthew Pennycook, minister of state for housing and planning, has published a ministerial statement about the reforms originally passed by the former Housing Secretary Michael Gove towards the end of the last Parliament.
The statement pledged to reform the “feudal” leasehold system – and blamed delays on mistakes made when the Conservatives passed the Leasehold and Freehold Reform Act 2024.
Pennycook said “specific and serious flaws” in the act would need to be rectified before legislation could move forward.
A constant struggle
The statement said that leaseholders faced “an intermittent, if not constant, struggle with punitive and escalating ground rents; unjustified permissions and administration fees; unreasonable or extortionate charges; and onerous conditions imposed with little or no consultation.”
Pennycook wrote: “Over the course of this Parliament, the Government is determined to honour the commitments made in our manifesto and do what is necessary to finally bring the feudal leasehold system to an end.
“Given that millions of leaseholders and residential freeholders are currently suffering as a result of unfair and unreasonable practices, we appreciate fully the need to act urgently to provide them with relief. However, we are also cognisant of the significant complexity of the task and the importance of taking the necessary time to ensure that reforms are watertight.”
The Leasehold and Freehold Reform Act 2024
The Leasehold and Freehold Reform Act 2024 was passed in the period prior to the dissolution of the last Parliament. Although some of the reforms in the act will help leaseholders, it only enacted a select number of Law Commission recommendations.
Sections of the act that need to be rectified include the right to manage (RTM) of buildings where a proportion of the building is used for non-residential purposes, and rules around enfranchisement.
A number of the act’s provisions came into force on 24 July. These related to legal costs associated with the remediation of unsafe buildings, the work of professional insolvency practitioners, and removing the situation where homeowners risked losing their home because of failure to pay an income-supporting ‘rentcharge’ after 40 days.
On 31 October, the Government activated further building safety measures, including clarifying how remediation contribution orders and remediation orders can be made in respect of interim measures.
Commonhold is coming
In the King’s Speech, the Government made clear it would publish a new draft Leasehold and Commonhold Reform Bill in this parliamentary session – this is likely to be in the second half of next year.
A central focus of the bill will be “reinvigorating commonhold through the introduction of a comprehensive new legal framework”, with a view “to making commonhold the default tenure”.
Campaigners welcomed the statement, but they also had concerns. A statement from the National Leasehold Campaign (NLC) said: “Our main concern now is the fate of existing leaseholders who are currently suffering at the mercy of unregulated managing agents and unscrupulous freeholders. The Government’s published intention to ‘act as quickly as possible’ will not be quick enough and we are already seeing the despair from some NLC members who are facing bankruptcy due to escalating service charges.
“In addition, it is very disappointing that the desperately needed ‘valuation’ element of the reforms will not be consulted on until summer 2025, with no clear date as to when this element will come into force. Many leaseholders are waiting for the promised fairer, quicker and cheaper mechanism to be able to buy their freehold or extend their lease and enable them to sell their properties and move on with their lives.”
