- Service charge information made clearer and legal costs
regime rebalanced so that leaseholders are empowered to challenge
unreasonable charges
- Reforms to make it cheaper and easier for leaseholders to
extend a lease or buy a freehold are a step closer to
implementation
- Part of the plan to support existing leaseholders as the
government brings the feudal leasehold system to an end in this
Parliament
Leaseholders will be given clearer information about the service
charges they pay and stronger protections against unfair costs,
as the government takes the next step in its reforms to end the
feudal leasehold system.
The key reforms set out in the Leasehold and Freehold Reform Act
2024 (LFRA) will give leaseholders greater control over their
homes and their money, making it easier to see exactly what they
are being charged for, understand how their service charges are
being spent and challenge unfair costs when things go wrong.
Following consultation with leaseholders, landlords and industry
groups, the government has confirmed it will proceed with a
series of measures to increase transparency around service charge
costs and rebalance the system.
Coming into force as soon as possible from 2027, the changes
include:
- An annual report, which landlords will need to provide to
leaseholders, giving a clear insight into the health and
condition of their building and plans for major works.
- A new service charge demand form, setting out detailed
information about service charge payments and what they will
cover.
- Where disputes arise, such as over service charges, new rules
will protect leaseholders from footing their landlord's legal
bills without challenge, and enable them to apply to recover
their own costs.
- Landlords will need to provide certain building information
on request, such as fire safety information and invoices for
maintenance works, going back up to six years and with clear
timeframes for responses.
This action will rebalance the system, increase transparency over
charges and help minimise the costs falling to leaseholders.
Housing Minister, said:
As we bring the feudal leasehold system to an end and move
towards a commonhold future, existing leaseholders will not be
left behind.
We are acting to enable more existing leaseholders to take
control of their buildings and more easily convert to commonhold
as and when they judge the time is right for them, and we are
strengthening protections for existing leaseholders in the here
and now by driving up service charge transparency and rebalancing
legal costs so that leaseholders are empowered to challenge
unreasonable charges.
In addition, two further public consultations have launched today
to drive forward enfranchisement reforms marking the next step in
making it easier for leaseholders to extend their lease or buy
their freehold.
They will explore plans to set specific valuation rates in
regulations, reducing disputes over costs and giving leaseholders
greater certainty about the price they will pay to enfranchise,
as well as protect leaseholders from covering their landlord's
solicitor, valuer or administrative fees when going through the
process.
Together, this will create a clearer system that helps more
people secure their home for the long term and have greater
control over where they live.
The measures set out today will be implemented as soon as
possible and will complement the upcoming Commonhold and
Leasehold Reform Bill, which will overhaul home ownership, ban
leasehold for new flats and cap ground rents at £250.
Kion Ahadi, Chief Executive of the Leasehold Advisory
Service said:
These reforms represent an important step towards a fairer and
more transparent system for leaseholders. As the leasehold
landscape continues to evolve, it is vital that consumers have
access to clear, impartial and expert information so they can
understand their rights and make informed decisions about their
homes.
LEASE is committed to supporting leaseholders, commonholders and
park home owners through this period of change. We will continue
to provide trusted advice, practical guidance and educational
resources to help consumers navigate the reforms with confidence.
Further information
The government's consultation response published today on
Strengthening Leaseholder Protections over charges and services:
Part 1 is here.
The consultation launched today on valuation rates is here.
The consultation launched today on process costs exceptions is
here. -
A plain English explainer document on the enfranchisement reforms
is here.
The LFRA sets a new method for calculating the price paid for a
statutory lease extension or freehold acquisition. It removes the
requirement for marriage value to be paid, caps the treatment of
ground rents in the valuation calculation at 0.1% of the freehold
value, and allows the government to prescribe the valuation rates
(deferment and capitalisation rates) used to calculate the
enfranchisement premium. The LFRA additionally requires that each
party to the claim bears their own process costs, with
exceptions. Together these measures will make enfranchisement
cheaper and easier for leaseholders.
