Housing minister Matthew Pennycook (main image) has confirmed that Labour intends to ‘end leasehold’ and make commonhold the ‘default’ tenure during the current parliament, making the comments within a prepared statement to fellow MPs.

His speech also included a commitment to regulate ‘property agents’ and adopt the ‘RoPA’ recommendations including those referring to firms which act as managing agents for leasehold blocks, a group that Pennycook said included too many ‘unscrupulous operators’. He also said minimum qualifications, a key plank of the 2019 RoPA report, would be implemented.

Pennycook affirmed that over the course of the current parliament, his government is determined to honour the commitments made in its manifesto and do what is necessary to “finally bring the feudal leasehold system to an end”.

Many may wish him luck – the Tories also tried to end leasehold using similar rhetoric, but the efforts of Michael Gove when he was Secretary of State came to very little.

Dashed dreams

Pennycook added: “For far too many leaseholders, the reality of home ownership has fallen woefully short of the dream – their lives marked by an intermittent, if not constant, struggle with punitive and escalating ground rents; unjustified permissions and administration fees; unreasonable or extortionate charges; and onerous conditions imposed with little or no consultation. This is not what home ownership should entail”.

The previous government’s Leasehold and Freehold Reform Act 2024 was passed in the ‘wash-up’ period prior to the dissolution of the last parliament.

But it enacted only a handful of Law Commission recommendations relating to enfranchisement and the right to manage, although Pennycook admits that the Act has “rendered the process of holistic and coherent leasehold and commonhold reform more challenging”.

He added: “While limited in nature, the Act introduced a necessary set of reforms that will provide immediate relief to those leaseholders and residential freeholders subject to unfair and unreasonable practices.

“As set out in the King’s Speech, it is therefore the government’s intention to act as quickly as possible to provide homeowners with greater rights, powers and protections over their homes by implementing its various provisions”.

Transformation

Commenting on the proposals to regulate managing agents, the Council for Licensed Conveyancers says: “We warmly welcome the government’s announcement today that it will be looking again at Lord Best’s report on the regulation of property agents.

“Professionalisation of managing agents and ideally regulation of the industry, can contribute very significantly to the transformation of home buying and selling, leading to a faster, more certain, more secure and less stressful conveyancing process. We look forward to next year’s consultation.”

In summary – details of the announcement

• Removal of the ‘2-Year Rule’ (January 2025): The government intends to implement the Leasehold and Freehold Reform (2024) Act’s provision to abolish the ‘2-year rule.’ This change will allow leaseholders to extend their lease or purchase their freehold immediately after acquiring their property.
• Right-to-Manage Provisions (Spring 2025): These provisions will make it easier for leaseholders in mixed-use buildings to assume management responsibilities from freeholders. In most cases, leaseholders making claims will no longer have to cover the freeholder’s costs. However, secondary legislation is required to clarify voting rights and other procedural aspects.
• Introduction of the Leasehold and Commonhold Reform Bill (Second Half of 2025): This bill aims to establish commonhold as the default tenure type by the end of the current parliament, representing a significant shift in property ownership models.

The government has also committed to launching consultations covering:

• Building Insurance Commissions: Proposals to ban commissions for landlords, property managers, and freeholders, replacing them with fees.
• Service Charges and Legal Costs: Initiatives to improve transparency and strengthen leaseholders’ ability to challenge unreasonable charges.
• Enfranchisement Premium Valuation Rates: Reviewing the methodology for calculating enfranchisement premiums.
• Consumer Protection: New protections for up to 1.75 million homes subject to charges.

Mairéad Anne Carroll, RICS Senior Specialist

“Following the passage of the Leasehold and Freehold Reform Act before the General Election, the market faced significant uncertainty regarding the timing of reforms.

“We welcome the Minister’s announcement, which provides much-needed clarity and helps the sector prepare for these changes.

“Strengthening leaseholder rights is central to these reforms. RICS has been actively working with the government to support this agenda, including through the Secretary of State-approved RICS Service Charge Code, which promotes best practices in the management of fees and leaseholder services and the development of a Block Management Sector Code which would provide consumers with much-needed clarity on the role and responsibilities of managing agents.

Timothy Douglas, Head of Policy and Campaigns at Propertymark

“Propertymark welcomes further reforms to leasehold to strengthen protections for consumers and make it easier for people to buy, sell and rent homes.

“It is encouraging that the Minister is looking again at Lord Best’s report and understands the value of qualifications for agents and professionalising the property sector. Propertymark looks forward to continuing to work with the UK Government to ensure these requirements are extended as widely as possible across the property sector.”

Mark Chick, director of ALEP and a Partner at Bishop & Sewell LLP 

“ALEP welcomes the ministerial statement which puts in place a timeframe and some objectives for the implementation of the Leasehold & Freehold Reform Act.

“It is clear that government recognises that changes to leasehold legislation are more complex than were first envisaged and we welcome the acknowledgement by the Minister that there are specific and serious flaws within the legislation which must be resolved.  This includes amendments to the valuation mechanism.

“The Minister also rightly points out that there are issues in relation to the proposed amendments to the threshold for the Right to Manage (RTM). Another issue is that (as matters stand) a 990-year lease extension would not be available for shared ownership properties as their landlords will not have sufficiently long leases to grant 990-year extensions.

“The most important change in this announcement is to the ‘two-year rule’, meaning that leaseholders will be able to access the right to an extended lease immediately, rather than having to wait two years (as is currently the case). This major shift is scheduled to come in January next year.

“This is a change which ALEP has long supported (since the formation of ALEP over 15 years ago) and will allow much greater flexibility and access to enfranchisement rights. This is certainly a ‘quick win’ for leaseholders and one significant piece of good news.”