Understanding Leasehold Reform Act Update - 2023

Understanding Leasehold Reform Act Update – 2023

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    The landscape of property ownership in the UK has been undergoing a significant transformation in recent years, largely attributed to the Leasehold Reform Act 2023. Initiated in response to growing concerns about the sale of newly built houses under leasehold agreements, this act aims to rectify issues and redefine the rights and responsibilities of both leaseholders and freeholders. This blog post will delve into the journey of leasehold reform, its key components, and the anticipated impact on the property market.

    The Path to Reform

    The seeds of change were sown on 21 December 2017, when the government acknowledged the problem of new houses being sold as leasehold instead of freehold. This marked the beginning of a comprehensive plan to address these concerns and regulate ground rents in lease agreements. The ambitious goal was to make property acquisition more accessible, efficient, and equitable.

    A Dual-Layered Approach

    The journey of leasehold reform took shape as a two-part legislative process. The first milestone was the Leasehold Reform (Ground Rent) Act 2022, which was enacted on 30 June 2022. This act heralded the promise of zero ground rents for future lease agreements, a commitment fulfilled in alignment with the evolving needs of homeowners. However, it’s important to note that its provisions exclusively apply to new lease agreements, with retirement properties gradually coming under its scope from April 1, 2023.

    A Glimpse into the Future

    On 20 February 2023, a significant statement by Michael Gove, the Secretary of State for Levelling Up, Housing, and Communities, indicated the impending transformation of the leasehold system. Acknowledging the plight of leaseholders at the mercy of freeholders, Gove expressed the government’s intention to end this archaic tenure structure, thus ensuring property owners can fully relish their ownership rights.

    A Step Towards Comprehensive Reform

    During a leasehold reform debate on 23 May 2023, Housing Minister Rachel Maclean offered insights into the imminent legislative changes. She affirmed the government’s commitment to reshape enfranchisement valuation methods, abolish marriage value, and cap ground rent treatment at a mere 0.1% of freehold value. The introduction of an online calculator to streamline enfranchisement processes promises to simplify and standardize valuation calculations. Importantly, leaseholders can look forward to greater autonomy by extending their lease agreements without ground rent constraints for up to 990 years.

    A Multifaceted Approach

    The reform journey doesn’t stop there. In January 2022, the government opened a consultation on extending right-to-manage and enfranchisement rights in mixed-use buildings. This engagement aimed to gather insights from stakeholders and the public, reflecting a commitment to inclusivity in the legislative process.

    A Glimmer of Hope for Commonhold

    The launch of the Commonhold Council in May 2021 showcased the government’s proactive approach to shaping the future of property ownership. Comprising leasehold groups and industry experts, this advisory panel was established to guide the government on the potential of commonhold homeownership—a testament to the continuous evolution of property law and ownership dynamics.


    The journey of leasehold reform has been marked by milestones that reflect a dedication to a more equitable and efficient property ownership system. 


    with its multi-pronged approach to valuations, ground rents, and extension rights, holds promise for a brighter future for both leaseholders and freeholders. As the real estate landscape continues to evolve, these reforms signify a commitment to adapting to the changing needs and aspirations of property owners in the UK.

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