What the new 2024 Leasehold Reform Bill means for you

The UK’s leasehold system has long faced criticism for being outdated and unfair. Leaseholders often deal with high charges, complex rules, and little control over their properties. The 2024 Leasehold Reform Bill aims to change this, bringing fairer and simpler rules to property ownership.

In this article, we’ll explain everything you need to know about the leasehold reform and how it could affect you.

Overview of the 2024 Leasehold Reform Bill

The reforms took effect in 2024, but their impact is still taking shape. Leaseholders and freeholders are getting to grips with the changes, and the government is continuing to provide updates to help everyone understand how the new rules work.

Key changes of the leasehold reform include:

  • Banning leasehold for new-build houses: All new residential houses will be sold as freehold to give buyers full ownership.
  • Simplified lease extensions: Leaseholders of flats and houses will benefit from a more straightforward and affordable process to extend their leases.
  • Abolishing escalating ground rents: Existing leaseholders will see ground rents capped or eliminated entirely to ease financial pressures.
  • Stricter rules on service charges: The UK leasehold reform introduces measures to ensure service charges are transparent and fair, with new rights to challenge unreasonable costs.

Impact of the bill on current landlords and managing agents

The 2024 Leasehold Reform Bill also brings big changes for landlords and managing agents, altering how they operate and manage leasehold properties.

Some of the key impacts include:

  • Lost revenue streams: Landlords will no longer earn income from escalating ground rents, which have been abolished for existing leases. Lease extensions will also become simpler and cheaper, reducing the profits landlords previously made from this process.
  • Pressure on service charges: Stricter rules around service charges mean managing agents must provide greater transparency and justify costs. This could stop them from charging for certain services and increase scrutiny from leaseholders.
  • Potential for legal disputes: As leaseholders gain new rights, disputes over ground rent, service charges, or historical agreements may increase. Landlords and managing agents may need to handle more challenges and claims from leaseholders seeking fairness under the new law.
  • Training and compliance: Landlords and managing agents will need to stay updated on the new regulations and ensure compliance. This may involve additional training, updated contracts, and more administrative work to meet the new regulations.

Impact of the bill on current leaseholders

The 2024 Leasehold Reform Bill offers many benefits for current leaseholders, addressing long-standing issues in the leasehold system. These include:

  • Reduced ground rents: Ground rents for existing leaseholders are being abolished or capped, saving leaseholders money and eliminating escalating costs.
  • Lower service charges: New rules aim to make service charges fairer and more transparent. Leaseholders will have stronger rights to challenge unreasonable charges.
  • Simpler lease extensions: Extending a lease will now be easier and cheaper. The new process removes legal hurdles and reduces costs, making it more accessible for leaseholders to secure their property rights.
  • Improved protections: Leaseholders now have greater power to challenge unfair practices and dispute decisions by landlords or managing agents. These reforms aim to create a more balanced relationship between leaseholders and freeholders.

Impact of the bill on future homebuyers

The changes introduced by the 2024 Leasehold Reform Bill are set to reshape the property market for future homebuyers, making the process of owning a home simpler and more transparent. This includes likely changes such as:

  • Shift away from leasehold houses: Under the new law, new-build houses can no longer be sold as leasehold. This means future buyers of houses will own the property and the land outright, avoiding the extra costs and restrictions associated with leasehold ownership.
  • Impact on buying decisions: With leasehold houses off the market, homebuyers may feel more confident purchasing homes, knowing they won’t face escalating ground rents or restrictive lease terms. This change could make freehold properties more attractive and straightforward for buyers.
  • Effect on property prices: The changes might lead to an increase in demand for freehold properties, potentially driving up prices in certain areas. However, removing these leasehold costs could also make homeownership more affordable in the long term.

The 2024 leasehold reform bill in summary

For current leaseholders, the leasehold law changes bring reduced ground rents, an easier and cheaper lease extension process, and stronger protections against unfair charges. Future homebuyers benefit from the abolition of leasehold for new houses, ensuring they own their property outright without hidden costs or complex agreements.

Although these reforms address historical issues for leaseholders, they also present challenges for landlords and managing agents – including loss of revenue from ground rents and lease extensions. The bill also introduces stricter rules around service charges, requiring greater transparency and compliance.

For the latest guidance and updates, visit the government’s official page here.

Disclaimer:

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

FP386-2025