We’ve all been there – you excitedly share a prospective property with friends or family and almost inevitably end up deflated by their concerned comments about its leasehold status. The stigma surrounding buying a leasehold property has become embedded in the housing market but thankfully this is changing, and fast. Debbie Clark explores how the Leasehold and Freehold Reform Act 2024 will give leaseholders greater rights, protections and control over their homes
What’s the problem?
Properties in England and Wales can currently be purchased as a leasehold or freehold. Leaseholders actually only own a right to occupy the property via a lease for a diminishing number of years, from a freeholder (or landlord). The unfortunate reality is that some of these freeholders are pretty unscrupulous and, as a result, leaseholders can be faced with unexpected and unaffordable costs imposed on them. The charging of excessive, and escalating, service charges and ground rent has meant many leaseholders have had their homeownership experience tarnished by feelings of frustration, and a lack of control over their financial position.
Housing Minister Matthew Pennycook says, “Millions of homeowners across the country will remember with fondness the sense of satisfaction, pride and security they felt when purchasing their own home. Yet, for far too many leaseholders, the reality of homeownership has fallen woefully short of the dream.” At its worst, the situation can make a leasehold property almost unsellable. While some charges are inevitable – and indeed necessary – to cover building maintenance, for example, the lack of regulation regarding freeholders has ultimately left leasehold properties with a bad name.
What’s changing?
The Leasehold and Freehold Reform Act 2024 (“the Act”) will make it easier and cheaper for leaseholders to buy their freehold, increase standard lease extension terms to 990 years and 999 years in London, where the head lease allows and provide greater transparency over service charges. The Act will also remove barriers for leaseholders to challenge their landlords’ unreasonable charges at Tribunal. While the Act officially became law in May 2024, the main provisions of the Act will not have effect until secondary legislation has been passed.
As of 31 January 2025, the Leasehold Reform Act 2024 has already removed the two-year ownership requirement, allowing leaseholders to apply for a statutory lease extension or initiate collective enfranchisement claims immediately after purchasing a flat. This should speed up the conveyancing process at the point of sale, as buyers have often insisted on a lease extension ahead of purchase, but there is still plenty of work to be done.
Linz Darlington, MD of lease extension specialist Homehold says, “While this is a welcome development, removing the ownership condition is a drop in the ocean in terms of what is needed from leasehold reform. It is a small change that will benefit a small proportion of leaseholders. We estimate that hundreds of thousands of leaseholders are waiting for the more significant changes to the lease extension regime which have been promised to make it ‘cheaper and easier’ for them to extend their leases.”
The Right to Manage measures in the Act, which increase access to that right for leaseholders in mixed-use buildings, alongside reforming costs and voting rights, should be enacted this spring. Meanwhile, consultation with all stakeholders continues to ensure the rest of the legislation brings the intended outcomes without disrupting the housing market.
What does the future hold?
In the King’s Speech on 17 July 2024, the Labour government promised draft legislation of a new Leasehold and Commonhold Reform Bill which will go further than the 2024 Act, aiming to bring the outdated system of leasehold to an end entirely, and to revive commonhold. This legislation would include tackling unregulated and unaffordable ground rents and maintenance costs, the removal of the threat of forfeiture so that leaseholders are protected from losing their homes for potentially small unpaid debts such as ground rents, and restricting the sale of new leasehold flats by requiring commonhold to be the default tenure. Of course, a period of consultation will be necessary to determine how this will work in practice. Watch this space.
As a first time buyer, the reality is that you are likely to be considering purchasing a leasehold property. While the reforms may be slower than some would like, the commitment is clearly there and the continuing developments ultimately mean you can take that first step on the property ladder with increased confidence.
Case Study
13.12.24
©Richard Eaton
Paulina, 35, and her husband Joel, 36, have purchased a two bedroom apartment on the fifth floor of Crescent Gardens in East Croydon with the help of shared ownership. They moved in autumn 2024, along with baby daughter Mary, having previously lived in a rented studio apartment elsewhere in Croydon.
“I had never heard of shared ownership,” says Paulina. “After Joel mentioned it to me, I did some research, and it sounded like a great way to buy a home without needing to raise a huge deposit. We booked four different viewings, including a viewing of an apartment at Crescent Gardens, right by East Croydon station. I had seen the building when using the station previously and always thought that I’d like to live there.”
The young family are reaping the benefits of their move. “I’ve been renting in Croydon for the past six years,” explains Paulina. “Joel moved in with me a year ago, then we had Mary, so we were definitely ready for more space!” Moving into Paulina’s rented apartment meant Joel was able to save for their deposit while Paulina continued to pay the rent, and their sensible arrangement has paid off. “We get so much more for our money at Crescent Gardens,” shares Paulina. “As we’ve gone from a studio to a two bedroom, two bathroom apartment, we have so much more space now; the property feels huge. I love the open-plan living space and the balcony.” Having bought a west-facing home, the family are treated to spectacular sunset views each evening, while little Mary, who turns one this year, loves sitting by the living room window and watching the trains pass by!
The location, just a four-minute walk from East Croydon station, was a key deciding factor when the couple viewed Crescent Gardens, as Paulina explains, “Locations don’t come much better than this. Crescent Gardens is just minutes from the station and shops but it’s also really quiet – we were delighted to be able to buy here.” Being so close to the station has considerably cut down commuting time for the couple, who both work in security in central London, and a planned bridge from the development to the station will shave more precious minutes off their travelling time.
Homes Available on the Market
WINCHESTER, HAMPSHIRE
Knights Quarter
From £68,750 based on a 25% share of the full market value of £275,000
This stylish collection of energy-efficient one and two bedroom apartments is located a 10-minute walk from Winchester’s iconic city centre. Boasting stunning architecture and impressive grounds, Knights Quarter is surrounded by countryside. Perfect for commuters, the development is a 10-minute walk away from Winchester railway station, offering services in to London Waterloo with a journey time of approximately one hour.
sovereignliving.org.uk/developments/knights-quarter-winchester
NORTHAM, DEVON
Bay View
From £172,500 based on a 50% share of the full market value of £345,000
Set in the village of Northam, Bay View offers some remaining three and four bedroom homes which are set on a hillside, overlooking the breathtaking Barnstaple Bay. Perfectly positioned to enjoy the stunning coastline of North Devon with the popular tourist destination of Westward Ho! nearby, Bay View is located in a highly sought-after location that the Home Reach scheme has now allowed to be much more affordable.
bovishomes.co.uk/developments/devon/bay-view-northam
MANCHESTER
L&Q at Victoria Riverside
From £61,875 based on a 25% share of the full market value of £247,500
This brand new collection of 128 one and two bedroom apartments is found within the City View Tower in Manchester’s up-and-coming Red Bank neighbourhood. A short stroll from Manchester Victoria station, the apartments are offered with two contemporary colour palettes to choose from and large picture windows, offering stunning views of the city. Residents will also benefit from an impressive range of amenities including a state-of-the-art gym, communal workspace, concierge service and podium gardens. Footpaths and cycle routes are right on the doorstep.
LINDFIELD, WEST SUSSEX
Walstead Park
From £124,000 based on a 40% share of the full market value of £310,000
Walstead Park is a new collection of one, two and three bedroom homes, set in the charming village of Lindfield (recently named one of the top places to live in the South East by The Times). Just six minutes’ drive away from Hayward’s Heath, the development is well connected to London (just under an hour) and Brighton (14 minutes).
abrihomes.co.uk/properties/walsteadpark
First Time Buyer is an exciting bi-monthly glossy which takes a stylish and comprehensive look at all the options available, setting them out in an entertaining and informative way, and helping potential customers navigate their way through what is often a daunting and complex process. We dispel the myths, reinforce the facts and arm the reader with the tools necessary to make their homeownership dreams a reality.
