Leasehold Reform Update November 2023

 In Probate

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On the 7th November, within the King’s Speech, a new Leasehold and Freehold Bill was announced, promising that there would be reform of the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackle the exploitation of millions of homeowners through punitive service charges.

The timescale goal set is ‘before the next general election’, which many expect to take place in 2024. However, this is a target and not necessarily guaranteed.

Even though there have been promises this change will be made pretty much annually since 2017, there is now a sincere feeling within parliament that with an election on the horizon, the Prime Minister will need to make a large gesture to win back dwindling public support for the Conservative Party, and this Bill will certainly help swing favour back his way. With so much focus on the housing market, passing this Reform could certainly make a huge difference in how the public feels about the party.

We should, however, keep in mind that the Leasehold Reform Bill was announced in the Queen’s Speech in 2021 – and nothing came of it then! All we can do is wait and see!

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What can we expect from a Leasehold Reform Act?

The short answer is a lower cost for extending the leaseholder’s lease or to purchase their freehold. There is a hope that ground rent will be lowered to £0 too.

Currently, leaseholders are unable to buy the freehold, so this freedom will allow those living in flats, for example, to escape the feeling of being held to ransom by a landowner who is able to make considerable changes to lease charges, which can financially cripple homeowners and put off any potential future buyers – leaving many feeling they are ‘imprisoned’ within their own bricks and mortar.

If a homeowner decides that buying the leasehold is not for them, whether through considered choice or a lack of the finance related in doing so, there will be the option to extend the lease by 990 years rather than 90 – which, when we look at mortgage lending, will make a huge difference as many banks and building societies having policies that restrict lending once a lease drops below a certain number of years. Then there is the cost of ongoing lease extensions, which, even if handed down through inheritance, is still one that can be considerably and fairly diluted.

In one case highlighted, someone bought a flat in 2008 with a £300 ground rent and a 10-year doubling clause, meaning the homeowner now pays £600. The same homeowner was quoted £25,000 to extend the lease – (information sourced by AJB, with thanks).

There are some other key changes that could make an appearance; they are:

  • Abolishing the two–year ownership condition (this is the restriction that sees current leaseholders having to wait two years before they can extend the lease (or if the property is a house, buy the freehold to it).
  • Abolishing leasehold houses – yep, this is still a thing! However, this could come with a caveat. Most houses sold as leaseholds are done so as to reduce the cost of the property. It will be interesting to see if this affects house prices on new home sites.
  • Abolish ‘Marriage Value’ – Shockingly, this is also still a thing. So, as an example – if you have a flat, and the lease is 60 years, once you increase the length of the lease, the value of the property will increase quite significantly. This increase is known as the ‘Marriage Value’ and, by law, must be split with the freeholder. In my humble opinion, this should be abolished regardless of the reform, as it can see landowners profiting from a homeowner’s investment and from a fee paid not through choice but necessity. Imagine this: you own the lease, and for someone to sell a flat that stands on the land, they have to pay you £10,000 to increase the length of the lease. Then, when they sell their flat, you are automatically legally entitled to a percentage of the difference in the value from the lower lease to the newly extended lease – not a small figure at all. Great if you own the leasehold, but not so good at all if you are the homeowner that does not.
  • Ground Rent to be abolished – although I cannot see this happening, it would be great news if it was. What I predict is that, at best, we will see a calculated cap.

I have been involved in the property market for the best part of 30 years now, and there are some trends and lessons I have seen and learned during this period.

Firstly, new build flats are expensive but cheaper than new build houses. For anyone on a budget who wants a brand new home, flats/apartments (or the aforementioned leasehold house) are the way forward. However, as with any new build, the resale value drops and with flats, the drop is steeper. Therefore, selling flats, or properties for the over 65s, becomes a longer process which, in many cases, ends up with a sale price lower than initially hoped for by the Vendor.

The problems with selling a leasehold?

I think this is where I should stress that I have no personal problem with leasehold properties in the slightest. I understand they have their place, and without them, we would have a very different-looking market. However, the law as it stands is outdated and is well past due to being reformed when there are changes in society, our environment and lifestyle changes. We can dive into the buying habits of the UK, which usually follow something along the lines of:

  1. First-time purchase – a flat or one-bedroom house.
  2. Second purchase – a second bedroom is introduced, maybe with a small third.
  3. Third purchase – a three-bedroom terraced/semi-detached with parking and a garden is usually on the shopping list.
    Depending on the individual situation, there is a bigger purchase, which could be four or five bedrooms.
  4. Next is usually where we see homeowners downsize. Maybe due to the children leaving home, or the owner wants to do less housework.

With more family diversity and family breakdowns, these trends can change with people moving from the third purchase back to the first purchase stage. Why is this relevant? Well, think re-sale, think the cost of living too – with the additional stress any unexpected rise could have on a person.

What I am saying is that we need to see a change in the way leaseholds are put together and, indeed, managed. The resale market for flats is challenging due to the sheer volume of them that get placed for sale. Add to that reduced lease terms and potential increases in charges, and you have an even harder task.

This reform will enable leasehold homeowners to retain better value in their property, which will make buying financially easier.

Some stats:

  • In 2021-22, there were an estimated 4.98 million leasehold dwellings in England. This equates to 20% of the English housing stock. Of these, 2.86 million dwellings (57%) were in the owner-occupied sector, and 1.85 million (37%) were privately owned and let in the private rented sector. The remaining 272,000 (5%) were dwellings owned by social landlords and let in the social rented sector.
  • 70% of the leasehold dwellings in England (3.5 million) were flats; the other 30% (1.5 million) were houses.
  • At the Regional level, London and the North West had the highest proportion of leasehold dwellings, at 36% respectively, significantly higher than all other regions of England, which had between 9% and 17%.
  • The number of leasehold dwellings in England increased in the two years between 2019-20 and 2021-22 from 4.65 million to 4.98 million. The apparent increase from 4.68 million in 2020-21 to 4.98 million in 2021-22 is not statistically significant.
  • (data sourced from
  • Just over a fifth of property sales in 2019 were leasehold – 238,000 transactions (approximately) – data provided by the Land Registry.
  • Around 752,000 households with children, and 1.48 million over 65’s are leasehold homeowners – sourced.

In summary

It is my opinion that if these changes are made and the Reform Bill is passed, this will be great for leasehold homeowners – current and future.

All we can do is hope that the right decision is made at the earliest opportunity. If this was not in the best interest of homeowners, it would not keep being referred to.

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