Major Reforms for Leaseholders: What to Expect in 2025
The previous landscape of leasehold property rights in England and Wales is set to finally undergo significant transformation in 2025, bringing forth some of long-awaited reliefs to leaseholders.
As part of the government’s previous leasehold reform agenda, new implementations will remove key barriers to lease extensions and enfranchisement, expanding the leaseholder rights, and paving the way for comprehensive legislative change.
Immediate changes from 31 January 2025
One of the most notable reforms taking effect from 31 January 2025 is the removal of the two-year ownership requirement for leaseholders seeking to extend their lease or buy their freehold. Previously, leaseholders were required to wait two years before initiating these processes, but this will no longer be the case, significantly improving flexibility for those seeking greater control over their properties.
The change applies not only to flat leaseholders but also to house leaseholders, who will now be able to extend their lease or purchase their freehold immediately upon acquiring their property.
What these changes mean
The upcoming reforms marks a reignited focus in the UK Property Laws, with a clear focus on empowering leaseholders and reducing exploitative practices by freeholders. By eliminating costly delays, expanding Right to Manage access, and preparing for a major legislative overhaul.
Voluntary and Statutory Lease Extension procedures
The processes involved in navigating lease extensions and enfranchisements is a complex legal minefield and requires specialist advice in order to successfully action the extensions.
Voluntary Lease Extension – A lease extension can be agreed upon directly between the landlord and tenant, with negotiated terms and variations. Rent may be set at an equal or lower proportion of the current rent until the original term ends, followed by a peppercorn (£0.00) rent. Alternatively, a peppercorn rent may be agreed to apply from the extension’s grant date going forth for an agreed premium. Once all has been agreed between the parties. We can assist in formalising the agreement through a new lease. If there is a charge on the leaseholder’s or freeholder’s title, beneficiary consent is required from the charge holder and if there are no charges or restrictions, there will be no further consents required to be obtained, and the lease can be agreed and executed.
Statutory Lease Extension – The premium is determined through a valuation, typically conducted by a RICS-accredited valuer. Once the valuation is obtained, a notice is served to the landlord, who has two months to respondeither accepting the claim or issuing a counter-notice with proposed terms and a statutory deposit.
Upon agreement, new leases are prepared for execution, and completion is arranged on a mutually agreed date.
A short lease can reduce property value and complicate selling or refinancing. Addressing it early helps maintain marketability, as extension costs vary based on the remaining term.
These new changes are a positive development, reducing constraints for leaseholders and helping to control costs, preventing continuous increases while waiting to extend the lease.
With these changes on the horizon, leaseholders should stay informed and prepared to take advantage of the new legal landscape in 2025.
For advice and guidance, contact Sweeney Miller Law’s lease extension and enfranchisement specialist Shahar Sadat via email at Shahar.Sadat@sweeneymiller. co.uk, visit www.sweeneymiller.co.uk or call 0345 900 5401.