The Leasehold and Freehold Reform Act was rushed through last week at the end of this undistinguished Parliament in a process called “wash-up”, which means the Opposition gave it its blessing.
https://www.gov.uk/government/news/leasehold-reforms-become-law
It is an undistinguished law, with just about everyone on the right side of the argument being disappointed, but it is far from being a wash-out.
This is the second of the significant leasehold reforms brought about in large measure by the Leasehold Knowledge Partnership – as former housing minister Stephen Greenhalgh kindly acknowledged on Twitter.
The first was the 2022 ban on creating new ground rents, the Leasehold Reform (Ground rents) Act.
None of us can say that the new Act is an unalloyed triumph. Many of the things we asked for – primarily mandatory commonhold – were always absent, and the more controversial elements of the Bill, such as a cap on group rents, have had to be dropped as the government ran out of life.
Regulation of managing agents, and securing leaseholders’ money, was also never part of the Bill – just at the point when assorted RMCs and RTMs in the Nottingham area are reporting to us that £750,000 has been stolen from their reserve funds, with the police inevitably reluctant to act.
So it would be easy to disparage this compromised reform as a damp squib.
It does introduce welcome changes to unbalanced legal costs in disputes, makes enfranchisement easier and cheaper, may help fleecehold victims on managed estates (a bit) and, unmentioned in the government’s summary, introduces standardisation of service charges.
It is obvious to all that leasehold is going to have to be revisited again soon, but more importantly the Act opens the door to a raft of secondary legislation.
Here leaseholders can have grounds for hope.
The approach of Martin Boyd and myself in the Leasehold Knowledge Partnership has always been two-fold: I did the sharp-elbowed reporting, exposing the numerous montesing scams and their practitioners that you can read about on this website.
Faint little voice though this website may be, it did set the agenda for reform and gained national attention: over retirement housing scandals, doubling ground rent, leasehold houses and, then, the rippling fallout throughout the sector following the Grenfell tragedy in June 2017.
Exposing some of this stuff has been at considerable risk: there is a leaseholder at present disentangling him/her self from a mischievous defamation threat after retweeting an LKP tweet, with some piffling but unfortunate additional comments. Their legal costs so far are over £200,000.
Meanwhile, led by Martin, we cultivated the officials, the Law Commission, the Competition and Markets Authority, the markedly complacent Financial Conduct Authorty and, on rare occasions and completely unsuccessfully, the police.
All this work over years has borne fruit: we at last have a highly talented and informed collection of leasehold officials (in a department that used to chose to believe there were no issues in the leasehold sector at all).
At the end of last year, Martin was appointed chair of the Leasehold Advisory Service, with a permanent seat – well, three years – to influence government thinking on leasehold.
So I think that it is a fair bet that a new government gives a sympathetic ear to reviving mandatory commonhold, and revisits pronto the limitation of ground rents that was to have been part of the Leasehold and Freehold Reform Act.
Regulation of managing agents, and protection of other people’s money that they control, will also make a reappearance.
As the British move towards living in flats – like most of the rest of the urbanised world – the old leasehold gig of selling new properties with complicated financial instruments in their contracts that pay out to shifty investors – invariably overseas – is largely exploded.
With this Act, and in these circumstances, the leasehold system is moving towards its well merited end.
Sadly, the financial parasitism in residential property has largely moved on to shared ownership (“for profit” social housing etc), nobbling the grant allocators of Homes England and fleecehold managed estates, which broke councils are absolutely not going to want to adopt.
Hugely important to the achievement of LKP has been Sir Peter Bottomley, who may or may not chose to stand again for Parliament.
In his last speech on the last day of the last Parliament, he kindly thanked LKP, Martin and me for what we have achieved.
He also thanked Liam Spender, the LKP trustee and commercial solicitor, who has launched a series of actions against his landlord in London’s Docklands.
I think leaseholders will be hearing a lot more about Liam Spender in the months, and years, ahead.
Related posts:
Labour to cap ‘legalised extortion’ of ground rents and end leasehold houses … Opposition and government now compete to reform leasehold
Freeholds aren’t worth £27.3bn. They are worth what someone might pay for them today
Don’t forget about 10 million voters, Bottomley tells the government … which omitted leasehold reform from the Queen’s speech
Select Committee Leasehold reform inquiry launches
Peter Bottomley MP calls for a debate on leasehold reform
Damning ruling on E&J’s insurance over-charging
Makes enfranchisement (buying freehold) easier and cheaper. Any chance you can expand on that, Sebastian? And when will the freehold calculator be available?
I am not an innocent, in fact I consider myself to be streetwise. But I was completely ignorant about leasehold and its meaning/consequences until I came across LKP. Once I did come across LKP the blinkers were removed from my eyes, and in more ways than leasehold. We do absolutely live in a thoroughly corrupt country (world).
Mr Boyd & Mr O’Kelly,
I would like to express my personal gratitude to you both for the outstanding achievements outlined (synopsis) in the Government news article “Leasehold reforms become law”
I did not remotely expect LKP and others; to bring about so much positive change in one go.
Obviously, the rent cap and other issues including the regulation of managing agents need to be addressed which can easily be put right by the next Government should they choose to do so in the first one hundred days?
Well done to the LKP team for being instrumental in getting this result, and keeping going over the years despite the many obstacles in the way. A better future is in sight, and I am hopeful the next government will be less chaotic and more sympathetic to the needs of leaseholders compared to the current one.
Thanks to Seb and Martin for what they have achieved so far, despite having to overcome negativity from the most unexpected sources. If we get a change in Government I hope we can hold them to the promises they have already made.
I hope also that more Regulation will apply to the Landlords and Managers of Social Housing, a Sector where Leaseholders get a really bad deal.
The Rent including the Service Charge for Tenants in Social Housing is capped every year and this year it is at 7.7%, fixed by the Government.
Whereas there is no limit on what the Leaseholders Service Charges can be. We at a major MTVH Retirement complex have had a 66% increase this year and over the past four years it has risen by 160%. We do not have the choice of RTM.
Concur on congratulations. Leasehold is far too profitable to go quietly. Now remains to be seen if new extension process will be easier and cheaper in every region or whether the standard government theory of “winners and losers” will hit us out in the sticks and not living in London.
Your Partnership has made a great contribution, thank you. The workload must be high.
Huge questions remain about the other side of Leasehold Knowledge: The legal science. Intelligent people should be able to read, understand, and question it if need be. Of course academics cannot pre-judge a situation that truly has not been judged. But how on earth, given our many centuries of legal history, can the very basics of land law remain so uncertain and opaque?
Standards seem to have regressed. For example, is there no longer a duty to ensure that deeds are conducted in good faith?
I think there still is, as I have pointed out at some length to HM Registrars (following their erroneous registration, through a conveyancer, of nine houses to himself). A lot of leasehold scams would be nipped in the bud if registrars asked a few sensible questions. Of course they deny negligence in processing non-consensual disposals of freeholds to third parties. The further court case they require of me, to prove the point for our own property, could well go beyond our means to fund, I am advised.
Registrars will not budge and I find that disgraceful. We should not face such an uphill struggle to counter dishonest conveyancing, should we?
The Act is not what leaseholders were hoping for 6 months ago, but it is surely something they could only dream of 6 years ago. A lot of the credit if leaseholders have now at least this Act goes to the LKP. Secondary legislation will be important, as mentioned in this article. But equally important is the publicity that the issue have obtained through debate and analysis of the Bill in both Houses, along with the details of the leasehold scandal emerged through the responses to the Call for Evidence, both the published and the many unpublished ones, but still available to MPs. Leaseholders now have some additional protections, but also a sound basis for further addressing, and hopefully abolishing, the leasehold system. It will also be interesting to see if, as a result of the Act and the publicity around leasehold matters, some authorities will take a more proactive role in tackling the many issues which have blighted leaseholders for decades.
Would it be too much to have an article explaining whats in the bill rather than this self congratulatory post?
I tried reading the bill and it was hundreds of pages of legalise i didnt understand.
Cant find anywhere on the internet summarising what it does.
I agree. I scoured the media trying to find specifics of what’s in & what’s out, and finally asked a leasehold lawyer, who explained that almost all of the proposals for change, eg scrapping marriage value, require secondary legislation to set a date from which this will begin. In other words this wretched bunch of chancers have not enacted anything. We still rely on the next Government to make any of this happen. Leaseholders who’ve been waiting 7 years since the Govt’s first promise of reform deserve better information. I thank LKP for the lobbying work it has done but I’d like to see more reporting, and more interpretation of exactly how machinations in Westminster affect leaseholders in their homes.
Your comments are totally correct if you had engaged and paid the LKP for advice, but as they are a charity I don’t think you can criticize them for failing to set out in plain English the terms of the new Act for no remuneration.
It is clear they have had input into helping to address problems with leasehold and perhaps a thank you to them would not go a miss
I wasn’tasking for legal advice. But I thought (maybe wrongly) the aim of the chariy was to inform.
Just like a cancer charity explains in simple english how cancer works and what you can do to combat it.
I would’ve thought a campaigning charity on leasehold would give a brief overview of whats in the bill and it’s affects on leaseholders.
After all if we are not informed how can we campaign?
Thanks Joe, you’ve had the balls to say what I was thinking.
Supposition, wishful thinking and self-congratulations isn’t getting us anywhere. LKP are out on a limb, and out of their depth without much proper backing and engagement from MP’s. An All Parliamentary quango with no teeth (and no trousers). After July 4th those elected will be looking after their own interests, not those of leaseholders. If managing agents, and more alarmingly RMC’s are now plundering reserve funds (not in the least surprising really is it?) some detail would be helpful. As for the Lease Advisory Service, it will take at least three years to iron out the fundamental failings of that government department. A coach load of Martin Boyd’s would be needed to sort that underground movement. The only – free legal?- ‘advice’ they give is to direct you to seek guidance from a firm of solicitors. Otherwise, what they tell you is feely available online. No-one should should be holding their breath……
I can sympathise with your anger, we have all been there regarding the unfairness of leasehold. I too am one to get frustrated but I can assure you that LKP, Martin and Seb, have been frustrated too with the constant promises of reform, continuous consultations and soft soaping by government over many years. It does seem as if the LKP charity is being patted on the head in these APPG committees but over time, slowly, changes have been made.
The LEASE organisation has changed from the top down with the unsavoury articles that have been previously in charge. Our man has now been put in charge. The LKP have got some important cross party MP allies batting on the side for fairness. We believed Mr Gove did from his comments in parliament – is it more Gove BS or true sentiment? – one never knows with him but there are some serious opponents to change with wealth and political connections to resist the changes we need to the law. Apparently, Gove wanted full scale changes but the Chancellor reeled him in.
In 2022 we got ground rents banned from future leases – a big win, maybe not for existing but a huge favour to future tenants. Same in 2023 for retirement leases.
However, the devil is in the detail and yes it will be easier and cheaper to extend leases and especially for those with “Marriage value”. The next government, hopefully Labour will make the next set of changes – abolition of forfeiture, abolition of AST`s, commonhold tenure and for existing tenants, a cap on ground rents.
The current government have done all the law commission work here and answered the question put by the legal eagles, what cap will be lawful? Well they reckon a 0.01% cap and they`ve argued it out to be fair. Whilst the rent seekers put forward a proposal they`d be happy with – a cap of £250 on all leases – so even they were prepared to concede some ground knowing what was coming.
So be thankful it will be coming in the next parliament – its been promised and by george there with be a f******* revolution if Starmer doesnt see it through.
However, who are you? are you multi property landlord who didnt read his lease, didnt understand leasehold and got eaten by a bigger fish with real clout and legal nous? Are you bothered because your BTL portfolio has dived?
Or maybe you are just an innocent tenant, leaseholder trying to make a home caught up in the feudal bollocks British property laws?
I hope the latter.
Joe,
I found the GOV.UK news story “Leasehold reforms become law” To be very informative. From memory it is a three page synopsis.
I agree with Joe blogs and Gerri Ellis. The important thing now is to build a campaign putting pressure on Labour to make good on the promises made by Lisa Nandi, Angela Rayner and Mathew Pennycook, for a bill in the first hundred days of a Labour Government which will reduce ground rent to a peppercorn and make Commonhold easily available for the millions of us who are being ripped off every day by the freeholder parasites. They are taking billions from us in legalised theft and devaluing our homes.
I would be very surprised if Labour committed to anything until the outcome of the inevitable challenge by the Great Estates to marriage value and the financial service industry challenge on capping of rents in an enfranchisement.
The LKP is to be congratulated on what it did achieve – well done. Around nine years ago my son bought a leasehold flat with an adequate length of lease, but I warned him that the reviews on the ground rent were such that he needed to sell it on long before the effective doubling which took place every 21 years. He was happy there (his first property) and when he did need to sell, the pending revaluation made the flat unmarketable. As a former Trust and Estate Practitioner I was familiar with leasehold tenure, but the results were worse than I thought. LKP were helpful and a suitable lawyer they recommended gave good advice. However, it took a gift from me of £42,000 to graft on an extra 90 year term and extinguish the ground rent. The process was agonisingly slow and his new purchase is, needless to say, freehold. Freeholders will never give up this cash cow unless it is taken from them and they negotiate as slowly and generously as Josef Stalin.
With gratitude to you all for the benefits you have worked for and provided in this and the next steps towards a fair leasehold climate.
A “fair leasehold climate” is one were (domestic) leasehold does not exist. I have said this before, I tire of people calling for REFORM, the abolition of (domestic) leasehold is the ONLY way to go. Do I hold out much hope of a new Labour government abolishing leasehold? No, the Labour Party is now as much a part of the establishment as the Conservative Party. And Keir Starmer is a lawyer, the legal profession will lose out big time if leasehold was abolished.
The LKP has done a great job in getting the reforms we have had recent years. Reading a few of the above comments perhaps you must sometimes wonder why you bother .
As for those thinking lawyers like the leasehold system, well the vast majority of conveyancers who act for ordinary buyers or sellers dislike the leasehold system too, and welcome changes such as the ban on new ground rents and the measures enacted in this year’s reforms.
Unfortunately living in flats involves complex contractual and management arrangements whether that is leasehold or commonhold.
Ideally we would not be trying to fit so many people on a small island, so people could more often live in houses rather than flats.
It might well be the case that lawyers dislike the leasehold system when it comes to conveyancing, but when it comes to making filthy lucre from enfranchisement and all things relating to, lawyers love leasehold. Are you a member of the legal profession?
I don’t understand why people are taking offence at what I said. I think LKP have achieved stuff.
But I still find it strange that the first piece of legislation in eons has had no explanation or analysis.
How are leaseholders supposed to campaign if they are not informed?
Maybe this charity doesn’t want leaseholders to campaign or be informed?
I have read the gov website which gives a very rosy picture of what rights we have been given. But then I look elsewhere I find actually we don’t yet have any of those rights. It all being left to secondary legislation.
This is why we need charities like LKP to explain to us in simple terms a brief overview. Not detailed legal advice.
Couldn’t agree more. “Reform” is a distraction from what is needed.
Ground rent should never have existed, likewise all leases ( if they must exist), should be for a minimum period of 999 years. This should get rid of the irritating distraction of erm… how much is it going to cost to extend lease etc.
We can then concentrate on dealing with service charge issues, which in my view is the bulk of the problem. Further, there should be a body that monitors the tribunal and their decisions. At present, they nearly always do not reflect the spirit of the laws that was passed to protect leaseholders. They cannot be the custodian of our rights without being oversight.
If as seems likely, the next Government will be Labour, is there anyway we can campaign for Barry Gardiner to be the new Housing Minister.
So we have got Angela Raynor in charge. As she appears to be very energetic and wants to get on with the job, should we be getting our arguments on leasehold to her first so we don’t become bottom of the pile.
as far as I can see nothing has changed for me except I now get a slightly more detailed explanation of how my freeholders management company is stealing from me.
My understanding is nothing in the bill which make one bit of difference to me.
From what I hear in the papers Labour will abolish freehold on new flats. So thats my flat worthless them. But I’m still chained to my leaseholder with my service charges rising about 50% a year ( for no extra services or maintenance).
I can’t even rent because the flat is so bad I doubt it will ever be able to pass any of the minimum standards that will probably be enforced on landlords(rightly so).
Maybe I should cross the channel on a dingy and then I might actually qualify then for the 1.5 million social homes they are going to build. I will be homeless because there will come a point that I can no longer afford my service charges despite being in high wage job.
Btw my flat is 29 square metres so no comments about only buying what you can afford. Its literally the smallest flat one can buy not some swanky penthouse.