The Leasehold and Freehold Reform Bill has taken a step towards becoming legislation after it was introduced to Parliament, promising leaseholders a fairer deal, along with greater rights and protections.

New rules should make it easier and cheaper for leaseholders to buy their freehold, increase standard lease extension terms to 990 years for houses and flats (up from 50 years in houses and 90 years in flats), and provide greater transparency over service charges. The Leasehold and Freehold Reform Bill will also rebalance the legal costs regime and remove barriers for leaseholders to challenge their landlords’ unreasonable charges at tribunal. New powers will help more leaseholders take over management of their property, allowing them to appoint their managing agent.  

Two years

It will remove the requirement for a new leaseholder to have owned their house or flat for two years before they can extend their lease or buy their freehold. Those in mixed-use blocks of flats would be allowed to take over the management of the site or buy its freehold if 50% of the floor space is commercial.

The Bill will also scrap and ban the sale of new leasehold houses so that, other than in exceptional circumstances, every new house in England and Wales will be freehold from the outset – however, some MPs have already expressed their frustration that this won’t extend to flats, which make up about 70% of all leasehold properties.

Redress scheme

The government plans to introduce further reforms which will require freeholders, who manage their building directly, to belong to a redress scheme so leaseholders can challenge them if needed.

Housing Secretary Michael Gove (pictured) says it’s a “landmark moment” for millions of leaseholders. He adds: “People work hard to own a home. But for far too long too many have been denied the full benefits of ownership through the unfair and outdated leasehold system.”

The government is currently consulting on options to cap ground rents for existing leases.

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