Understanding Leasehold Reforms in 2025

Leasehold law in England and Wales is undergoing some of the biggest reforms in decades – and if you’re a landlord, property owner or considering buying a property, these changes could directly affect you.

Some parts of the Leasehold and Freehold Reform Act 2024 have already come into effect, with more changes on the way as the Leasehold and Commonhold Reform Bill is set to land in late 2025.

From longer lease extensions to tweaks in ground rent and freehold rights, these reforms could have a real impact on how you manage and invest in your properties.

Here you’ll figure out exactly what these reforms mean for landlords, what’s changed already, and how you can prepare your property portfolio for what’s coming next.

1. The Leasehold and Freehold Reform Act 2024
   • What’s changed so far?
   • What new rights will leaseholders gain?
2. The Leasehold and Commonhold Reform Bill

The Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 is new legislation aimed at making leasehold ownership in England and Wales fairer, simpler, and more transparent.

It includes big changes like 990-year lease extensions, zero ground rent on new leases, and easier routes for leaseholders to buy their freehold.

The Act was passed at the last minute during the wash-up period of parliament, just before the 2024 general election – a move that caught many in the property sector by surprise.

While a few provisions have already come into force, the majority of the Act’s main reforms are not yet in effect. Many will require further consultation and secondary legislation, meaning that full details and timelines are still to be confirmed by the government.

What’s changed so far?

Here are the key updates that have already been made:

• Insurance fee transparency: The government launched a consultation to improve the transparency of building insurance fees for leaseholders, which closed on 24 February 2025.
• Implementation of the “two-year rule”: As of 31st January 2025, leaseholders can extend their lease or buy their freehold without having to wait for two years after purchasing their property.
• Right to manage provisions: As of 3rd March 2025, new rules make it easier for leaseholders to take control of management through the right to manage. This includes lowering the criteria to qualify and removing the need to pay for the freeholder’s legal fees when making a claim.

There are still several important consultations and changes expected in 2025, which could further impact the leasehold landscape:

• Consultation on service charges and legal costs: The government will soon ask for feedback on the new rules that stop landlords and property managers from earning commissions on building insurance. These rules will make it easier for leaseholders to see what they’re actually paying for and ensure they’re charged fair and transparent fees instead of hidden costs. The consultation is expected to begin “very shortly.”
• Consultation on enfranchisement premiums: When leaseholders want to buy their freehold, they often have to pay a price called the enfranchisement premium. The government plans to ask for opinions on how to fairly set this price in summer 2025. This will require new laws to make sure the changes are properly implemented.
• Consultation on “fleecehold” estate management charges: The government will also look into ways to protect freeholders from being charged for estate management without being given the right to challenge the fees. They want to ensure that freeholders have clear information about what they’re paying for and can challenge unreasonable charges through the first-tier tribunal.

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What new rights will leaseholders gain?

As mentioned, the Act applies to leaseholders in England and Wales, and it will bring some important changes, including:

Making it cheaper and easier to extend leases or buy freeholds:

It will be simpler for leaseholders in houses and flats to extend their lease or buy their freehold. This includes removing the cost of “marriage value”, which is an extra charge when extending a lease.

Longer lease extensions

Leaseholders will be able to extend their leases to 990 years, and ground rent will be reduced to a peppercorn (meaning no cost at all). A premium will still need to be paid, but it will be much more affordable.

More leaseholders will qualify to extend leases or buy freeholds

The new rules will make it easier for more leaseholders to extend their lease, buy the freehold, or take over management of their building.

Ban on new leasehold houses

In most cases, the Act will stop new leasehold houses from being created, though some exceptions will apply.

Better transparency for charges

Leaseholders will gain new rights to ask for more information about:

• Service charges: They can request details about what they’re paying for and how the money is spent.
• Administration charges and building insurance fees: There will be clearer rules around these charges, including any commissions landlords or managing agents might receive.

No more paying the landlord’s legal costs

Leaseholders won’t automatically have to cover the landlord’s legal fees when challenging poor practices. Instead, they’ll have the right to apply for their own legal costs to be covered by their landlord.

Improved access to redress schemes

If issues arise with property management, leaseholders will have easier access to ways to resolve disputes, especially when the freeholder manages the property directly.

Timely sales information

Leaseholders will have the right to receive important property sales information quickly, making it easier to stay in the know.

The Act will also strengthen the rights of freehold homeowners on private and mixed-tenure estates (estates where some properties are freehold and others are leasehold).

These changes build on the Leasehold Reform (Ground Rent) Act 2022, which already ended ground rents for most new residential leasehold properties in England and Wales.

The Leasehold and Commonhold Reform Bill

A draft of the Leasehold and Commonhold Reform Bill will be published in the second half of 2025, giving time for public consultation and further review in parliament.

The bill aims to:

• Strengthen leaseholders’ rights: It will build on previous recommendations to make it easier for leaseholders to extend their lease, buy their freehold, and take over management of their building.
• Revive the commonhold system: Commonhold, which allows flat owners to own the freehold of their property, was introduced in 2002 but has not been widely adopted. The government will modernise the legal framework to make it a more attractive option. A white paper on commonhold reform was published on 19th March 2025.
• Regulate ground rents for existing leaseholders: The bill will introduce more controls on ground rents for current leaseholders.
• End forfeiture as a way to enforce lease terms: The government plans to remove the threat of forfeiture (taking back a property) for leaseholders who don’t comply with the terms of their lease.
• Strengthen rights for freehold homeowners: Freehold homeowners on private or mixed-tenure estates will see their rights strengthened.

The government is also looking to improve how property managing agents are regulated, with plans to consult on this in 2025.

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