What Will Leasehold Reform 2025 Mean for You

Industry insights

What Will Leasehold Reform 2025 Mean for You?

At Parkgate, we understand that the upcoming leasehold reform changes in 2025 represent one of the most significant shifts in property ownership that England and Wales have seen in generations. With the Leasehold and Freehold Reform Act 2024 now in place and further primary legislation on the horizon, we’re here to guide you through what these vital reforms mean for property owners and potential buyers.

What Will Leasehold Reform 2025 Mean for You

The Current Landscape and Why Reform Is Needed

The existing leasehold system has long been a source of frustration for many property owners. We’ve seen countless cases where our clients have struggled with unaffordable ground rents, excessive building insurance commissions, and challenging service charges. The current lease arrangements, particularly for leasehold houses and leasehold flats, often leave property owners feeling trapped in an outdated system.

The Current Landscape and Why Reform Is Needed

Key Changes Coming in 2025

Removal of the Two-Year Rule

One of the most immediate changes we’ll see in January 2025 is the abolition of the ‘2-year rule’ through the Freehold Reform Act 2024. This means that if you’re considering lease extensions or freehold purchases, you’ll no longer need to wait two years after your property purchase to take action. This change will make the process of extending leases significantly more straightforward and will benefit leaseholders who want to act quickly to protect their investment.

Right-to-Manage Provisions

Coming into force in Spring 2025, these provisions will revolutionise how mixed-use buildings are managed. We’re particularly excited about this change, as it will empower leaseholders to take control of their properties without bearing the freeholder’s costs in most cases. However, we’re awaiting secondary legislation to clarify voting rights and other procedural aspects.

The Leasehold and Commonhold Reform Bill

The second half of 2025 will see the introduction of this groundbreaking bill, which aims to establish commonhold as the default tenure for new properties. This represents a fundamental shift away from the traditional leasehold system towards a more equitable form of property ownership.

Impact on Different Property Types

For Leasehold Houses

The government intends to effectively ban new leasehold houses except in exceptional circumstances. For existing leasehold houses, we’ll see:

  • Simplified processes for freehold purchases
  • More transparent service charges
  • Protection against high ground rents
  • Clearer rules around private estate management arrangements

For Leasehold Flats

The reforms will bring significant changes for both new leasehold flats and existing ones:

  • A standard lease extension term of 990 years
  • Changes to how marriage value is calculated
  • Greater transparency in service charges
  • Enhanced rights in challenging poor practice

Financial Implications

Lease Extension Costs

We anticipate lease extensions becoming cheaper thanks to:

  • Removal of marriage value
  • New valuation rates for enfranchisement premiums
  • Reduced freeholder’s legal costs
  • Simplified calculation methods

Ground Rent Reform

The reforms address one of the most contentious issues in the current system:

  • Existing leases with escalating ground rent payments will be converted to low ground rent
  • New properties will have ground rent capped
  • Better protections against draconian threats of legal proceedings

Professional Standards and Management

The property agent sector will see significant changes with:

  • Mandatory professional qualifications for managing agents
  • New standards for service delivery
  • Enhanced consumer protection provisions
  • Stricter oversight of private estate management arrangements

Consultation and Future Developments

The government has announced further consultations on:

  • Building insurance reforms
  • Service charge transparency
  • Enfranchisement premium calculations
  • Consumer protection measures

What These Changes Mean for Different Stakeholders

For Current Leaseholders

If you currently own a leasehold property, these reforms will:

  • Make lease extension claims more straightforward
  • Reduce costs for freehold purchases
  • Provide better protection against excessive charges
  • Give you more control over property management

For Prospective Buyers

When considering a property purchase:

  • New builds will likely be commonhold by default
  • Existing leasehold properties will have better protections
  • The lease extension process will be more transparent
  • Service charges will be more regulated

For Freeholders

The reforms will require:

  • Greater transparency in cost calculations
  • Changes to management practices
  • New approaches to insurance arrangements
  • Adaptation to enhanced leaseholder rights

Preparing for the Changes

We recommend taking these steps to prepare for the reforms:

  1. Review your current lease agreement
  2. Understand your property’s lease length
  3. Consider timing for lease extensions
  4. Assess service charge arrangements
  5. Stay informed about further consultations

Looking to the Future

As we move towards these changes, the Labour government has indicated that other vital reforms may follow. The final Grenfell inquiry report has also influenced aspects of building safety and management regulations that will be incorporated into these reforms.

How Parkgate Can Help

We’re staying up to date with all developments and are ready to assist with:

  • Explaining how the new law affects your property
  • Guiding you through lease extension claims
  • Supporting freehold purchases
  • Advising on right-to-manage options
  • Helping with service charge disputes

Conclusion

The leasehold and commonhold reform represents a once-in-a-generation change to property ownership in England and Wales. While some aspects of the reforms await further primary legislation and secondary legislation, the central focus is clear: creating a fairer, more transparent system that will benefit leaseholders for generations to come.

We’re here to guide you through these changes and ensure you make the most of the opportunities they present. Whether you’re dealing with leasehold flats or houses or considering a property purchase, our team of experts can help you navigate these important changes.

For more information about how these reforms might affect your specific situation, please don’t hesitate to contact our team. We’re committed to helping you understand and benefit from these vital reforms as they come into force.

Twickenham Services
09:03 06 Feb 25
Great communication and customer service from Daisy makes our job much easier. Parkgate estate agents are always a pleasure to deal with.
Stuart Smallwood
11:01 03 Feb 25
Valeriya M
07:45 28 Aug 24
Thank you to the Park gate team for a smooth process, always on the spot and available to help.
Sarah Druce
13:51 06 Aug 24
It is a pleasure to work with Parkgate. They have supported us all the way through from booking our initial viewing all the way through to managing the rental we are in now. Mark Langham was so quick to help us with our application, provide feedback from landlord on our approval, and get us through the process to secure the tenancy.Jonathan is our managing agent, and he regularly check in to see how things are going and are quick to respond with any issues. They have also scheduled maintenance and painting for us and have made recommendations and advocated on our behalf to the landlord for additional maintenance and improvements.
Gergana Filipova
11:43 01 Aug 24
Mo Stenhouse
10:12 01 Aug 24
I've used Parkgate in Richmond for over 15 years now. They have always found excellent tenants for my properties. They never fail to be friendly, supportive and very professional. Any queries or concerns I may have are instantly responded to. Can highly recommend them.
I cooperate with the agency as a tenant and completely pleased with the service of its agents. They are always ready to help with any property issue as soon as possible, promptly reply and react to any kind of enquiry. Special thanks to Jola for her pleasant communication style!
Erol Morgül
04:43 27 Jul 24
We purchased a house recently with Parkgate by a perfect service. I was in contact with Jonathan and Klaudia who are really professionals. They were easy to reach, fast acting and especially fair and honest. They were so straight forward that we managed the completion within a very short period. I reached them so easy whenever I need to talk over the phone or in person. I will never forget Klaudia’s good luck to us at the first viewing of property. We decided to buy at that first day and all was done so fast. They carried out all paper works so smooth and clear. I would highly recommend Parkgate. Thanks again to Jonathan and Klaudia.
KGuys Guys
18:14 26 Jul 24
I live in St Margarets road Parkgate is the one of the absolute greatest estate agents. I'd like to thank you to Susie and Jola for all your help these past few months. Your hard work helped me to get my dream home, and I couldn't be more grateful or excited about milestone. Thank you again for all your care and attention. You guys are the best!
Ben Shore
17:00 26 Jul 24
Really pleased with Parkgate. They manage my flat in Richmond. Because they're local they actually visit the flat regularly and use trusted local suppliers to deal with issues / maintenance etc. I find they are a reliable and easy agency to deal with, which reduces stress. Strongly recommend!
Emre Ovacık
08:38 01 Sep 23
Very responsive, informative and always kind people. We didn't have much time, but they helped us with creating some time in their agenda and squeezing us in. We rented our place just in time, thanks to them.
Branka Obradovic
12:21 22 Feb 23
Parkgate has been my agent of choice for a number of years now and has secured good tenants for my properties. They are hard working, respond in a timely manner and best of all are always friendly rather than aggressive or overbearing, which is the case with many of their competitors.
Jorge Rodriguez
15:01 02 Feb 23
Excellent service throughout.We rented a property that they manage for 4 years.Parkgate team is very professional and approachable. Way better than dealing with a big agency, they offer a more personal approach, always available and willing to solve any issues.From the tenancy agreement to handing the property back, it has been a real pleasure working with them.
Catherine Brown
12:16 30 Aug 22
I have had an eight year relationship with Parkgate, in fact they originally sold my flat to me 12 years ago in Putney. Their service and professionalism is unrivalled. They managed the leasing of my flat from 2014 and assisted me to negotiate the successful sale just now in 2022. Chris has been there throughout with an open door and no request too trivial to assist. Klaudia negotiated my sale and worked with amazing tenacity throughout. I would not hesitate to recommend Parkgate to anyone in the Putney/Richmond area, they know their stuff.
Ali Champkins
10:16 31 Jan 22
We have had a wonderful experience with Parkgate and would highly recommend them. Chris was brilliant on the valuation - what we liked is he was totally honest about our chances of selling and gave us the positives and negatives about our property (such as facing a council estate!). Other agents tend to just gush over the good bits which is great, but actually not that helpful.The selling process was great - we were given good feedback from the viewings and got the price we wanted within about 8 weeks.We really have nothing but praise for Klaudia and Chris, it's been really enjoyable, easy and stress free and we will be recommending Parkgate to all our friends in the area and our building.***** Thank you! *****
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