22 May 2025
It has almost been a year since the Leasehold and Freehold Reform Act was rushed into law on the final day before Parliament was dissolved ahead of the general election. One year on, this article breaks down the changes being implemented in the Act and outlines when these changes are expected to come into force across England and Wales.
What is the Leasehold and Freehold Reform Act?
The Leasehold and Freehold Reform Act 2024 was introduced by the former Government to make homeownership fairer, simpler, and more transparent for people in England and Wales.
The Act brings forward changes to how homes in England and Wales are owned and managed, including changes to leasehold rules and giving homeowners greater control over their properties.
For those responsible for managing residential buildings or estates, the reforms introduce new expectations which impact how properties are managed day to day.
Understanding the detail of the Act is key to staying compliant, but more importantly, it’s an opportunity to improve how developments are run, strengthen trust with residents, and deliver a more sustainable approach to property management.
Key changes introduced by the Leasehold and Freehold Reform Act
The Act introduces several reforms to modernise leasehold and freehold property ownership:
- Greater transparency over service charges:
Leaseholders will be entitled to clearer, more detailed breakdowns of service charges to improve accountability and reduce disputes. - Ban on the sale of new leasehold houses:
New houses will be required to be sold as freehold, with limited exceptions in place. - Lease extension reforms:
Leaseholders will be able to extend their lease by 990 years (up from 90 years for flats and 50 years for houses) and ‘marriage value’ will no longer be charged to leaseholders extending their leases when there is fewer than 80 years remaining. - Removal of the two-year ownership rule:
Leaseholders no longer need to own their property for two years before they can extend their lease or buy the freehold. - Reforms to Right to Manage (RTM):
Buildings with up to 50% commercial space are now eligible for RTM, and leaseholders are no longer required to cover the freeholder’s legal costs in RTM claims. - Building insurance commission reform:
Hidden commissions paid to freeholders or managing agents by insurers will be banned, and leaseholders must be provided with clear information about any fees or commissions. - Standardised property sales information:
Essential sales data will be required to be provided to leaseholders in a standard format, helping to streamline property transactions and reduce delays. - Improved access to redress and tribunals:
Once brought into force, new measures will be introduced to make it easier for freehold homeowners on private and mixed tenure estates to challenge unfair practices through redress schemes and property tribunals.
When do the Act’s provisions take effect?
While the Leasehold and Freehold Reform Act 2024 has officially passed into law, not all measures are yet in force. Here’s where things currently stand at the time of writing.
Provisions already in effect:
- Removal of the two-year ownership rule
- Reforms to Right to Manage
Provisions still to come:
- Ban on the sale of new leasehold houses
- Greater transparency over service charge statements
- Lease extension reforms
- Building insurance commission reform
- Standardised property sales information
- Improved access to redress and tribunals
The government has committed to phased implementation, with further consultations expected in 2025. A full timeline has yet to be confirmed.
For more context on how this fits into wider property industry trends, take a look at The Latest Trends Shaping the Future of Property Management.
Leasehold, freehold, and commonhold: What’s the difference?
Understanding the different types of property ownership is key to navigating the recent reforms.
Leasehold
As a leasehold homeowner, you have the right to live in the property for a set period of time. You do not own the property or the land it sits on. The freeholder (or landlord) retains ownership of the land and structure, and the leaseholder will often pay ground rent to the freeholder and service charges for the upkeep and management of the communal areas at the development.
Freehold
Freeholders own both the property and the land it stands on outright. They are typically responsible for the maintenance and management of shared areas in multi-home developments.
Learn more about how we support freeholders with our property management services.
Commonhold
Commonhold is an alternative to leasehold, where homeowners own their individual unit outright and jointly own and manage shared areas through a Commonhold Association.
While not currently addressed in the Leasehold and Freehold Reform Act, further legislation on commonhold is expected under the upcoming Leasehold and Commonhold Reform Bill, with draft proposals anticipated in the second half of 2025.
What is the structure of a modern lease?
The vast majority of modern leases have three parties: freeholder, leaseholder, and the management company. The obligation to manage sits with the management company. In most modern leases, the management company is a Resident Management Company (RMC), which the residents control. At FirstPort, more than half of our portfolio is made up of leases where we are the management company in the lease or where we act as agent for the management company.
Embracing change for sustainable property development
The Leasehold and Freehold Reform Act isn’t just about legal updates, it’s a chance to modernise how developments are owned and managed. For those involved in residential property, adapting to these changes now means building stronger, more transparent, and ultimately more sustainable communities in the long term.
By staying ahead of evolving legislation and partnering with experienced property managers, Developers, Freeholders and Resident Management Companies can future-proof their developments and improve resident satisfaction.
At FirstPort, we’re committed to shaping better places to live – not just today, but for the future. Our approach is built around responsible management, forward-thinking solutions, and long-term sustainability. Learn more about how we support this vision on our Residential Property Management page.
To discuss how we can support your development or management portfolio, get in touch with our team today.
Sources:
- Gov.uk (2024). Sweeping reforms to give leaseholders more powers and protections.
https://www.gov.uk/government/news/sweeping-reforms-to-give-leaseholders-more-powers-and-protections - Legislation.gov.uk (2024). Leasehold and Freehold Reform Act 2024.
https://www.legislation.gov.uk/ukpga/2024/22/contents - HM Land Registry (Gov.uk) (2024). Practice guide: Leasehold Reform Legislation.
https://www.gov.uk/government/publications/the-leasehold-reform-legislation
