Major Reforms for Leaseholders: What to Expect in 2025

The previous landscape of leasehold property rights in England and Wales is set to finally undergo significant transformation in 2025, bringing forth some of long-awaited reliefs to leaseholders. As part of the government's previous leasehold reform agenda, new implementations will remove key barriers to lease extensions and enfranchisement, expanding the leaseholder rights, and paving the way for comprehensive legislative change.

Immediate Changes from 31 January 2025

One of the most notable reforms taking effect from 31 January 2025 is the removal of the two-year ownership requirement for leaseholders seeking to extend their lease or buy their freehold. Previously, leaseholders were required to wait two years before initiating these processes, but this will no longer be the case, significantly improving flexibility for those seeking greater control over their properties.

The change applies not only to flat leaseholders but also to house leaseholders, who will now be able to extend their lease or purchase their freehold immediately upon acquiring their property.

Further Reforms in Spring 2025

The government has also announced that in spring 2025, access to the Right to Manage (RTM) will be expanded. This means that more leaseholders, including those in mixed-use developments, will be able to take over the management of their buildings from freeholders. A key benefit of this expansion is that in most cases, leaseholders pursuing RTM will no longer be liable for their freeholder’s costs, reducing the financial burden associated with property management disputes.

Beyond these immediate reforms, the government has outlined a broader roadmap for leasehold reform in 2025 which will follow.

What These Changes Mean

The upcoming reforms marks a reignited focus in the UK Property Laws, with a clear focus on empowering leaseholders and reducing exploitative practices by freeholders. By eliminating costly delays, expanding Right to Manage access, and preparing for a major legislative overhaul, the government’s roadmap promises a fairer and more transparent leasehold system.

Voluntary and Statutory Lease Extension procedures

The processes involved in navigating lease extensions and enfranchisements is a complex legal minefield and requires specialist advice in order to successfully action the extensions.

Voluntary Lease Extension – a term of years and any variations agreed between landlord and tenant directly, at a rent that has been agreed at equal or lesser proportion of the current rent until the end of the original term and a peppercorn ground rent from the new term or a peppercorn rent from the grant of this extension for a premium that is agreed between the landlord and tenant. At this point, we can assist to formalise the agreements by way of a new lease. If there is a charge on the leaseholder’s or freeholder’s title, consent will be required from the relevant beneficiary. if there are no restrictions, this is not required.

Statutory Lease Extension – leaseholder will have a right to a statutory lease extension (now no longer requiring the minimum two-year ownership). A term of 90 years is granted in addition to the remaining term of years left on the lease at a peppercorn (£0.00) rent as required by statute. The premium to be paid is obtained through a valuation done (usually by a RICS accredited valuer) in respect of a statutory lease extension. Upon receiving this valuation, the notice would then need to be served on the landlord. The landlord has a 2-month time frame by statute to respond admitting the claim and either accepting or submitting a counter-notice with their proposed premium and conditions and a statutory deposit to proceed. Once the terms of acquisition are agreed, the lease would be sent out for execution and completion by the parties, and the parties would arrange for completion of the lease extension.

Having a low number of years left on a lease can affect the value of the property and make it difficult to sell or refinance. It should be addressed as early as possible to ensure that the leasehold property remains at a marketable value and the costs associated to extending the term can vary quite significantly dependant on the number of years left on the lease of a property.

These new implementations are a welcomed change as it will mean that leasehold owners are faced with one less constraint allowing leaseholders to attend to extensions without allowing for premiums and costs to continuously increase whilst waiting for the day that they can finally arrange for the lease extension.

With these changes on the horizon, leaseholders should stay informed and prepared to take advantage of the new legal landscape in 2025. For advice and guidance, contact Sweeney Miller Law’s lease extension and enfranchisement specialist Shahar Sadat via email at Shahar.Sadat@sweeneymiller.co.uk, visit www.sweeneymiller.co.uk  or call 0345 900 5401.