Understanding The Leasehold Reform Act 2025: What’S Changed?

I’ve been following the Leasehold Reform Act 2025 closely, and I can tell you it’s about to reshape how you approach property ownership in England and Wales. The changes aren’t just tweaks—they’re fundamental shifts that’ll affect your rights, costs, and long-term financial planning as a leaseholder. Whether you’re considering a lease extension, eyeing freehold purchase, or simply want to understand what’s coming, there’s vital information you need to know before these reforms take effect.

Key Takeaways

Leaseholders can now extend leases for 990 years or buy freeholds immediately without the previous two-year ownership requirement.
Ground rent is capped at 0.1% of property value, with longer leaseholders able to buy out ground rent entirely.
Leaseholders no longer pay landlords’ legal costs for successful lease extensions, Right to Manage claims, or court cases.
New leasehold flats are permanently banned, with commonhold ownership becoming the default model for future developments.
Right to Manage eligibility expanded to buildings with up to 50% non-residential space, giving leaseholders greater control.

Key Changes to Lease Extensions and Freehold Purchase Rights

Since the Leasehold Reform Act 2025 takes effect on 31 January 2025, leaseholders will gain immediate rights to extend their leases or purchase freeholds without the previous two-year ownership requirement. This means you can take action the moment you complete your property purchase, eliminating the frustrating delays that historically affected new leaseholders.

I’ve seen how the old system left many feeling trapped, but now you’ll have immediate control over your property’s future. The reforms also extend statutory lease extensions to 990 years, replacing the previous 90-year terms for flats and 50-year terms for houses. You won’t face significant cost increases for these extensions, and current property valuations remain largely unaffected. These changes apply to both flats and houses under formal statutory extensions. Additionally, leaseholders in buildings with up to 50% non-residential space can now take over management through Right to Manage provisions.

Enhanced Right to Manage and Collective Enfranchisement Powers

Beyond individual lease extensions, the Leasehold Reform Act 2025 strengthens your collective power to control your building’s management and ownership. The Right to Manage (RTM) eligibility has expanded considerably, with non-residential floor space limits increasing from 25% to 50%. This means more mixed-use buildings can now qualify for RTM, giving you greater opportunities to take control.

The financial barriers you’ve faced are also reduced. You’re no longer required to pay your landlord’s legal costs in successful RTM claims – each party now bears their own costs. Additionally, voting rights within RTM companies have been reformed to prevent landlords from having disproportionately high votes, ensuring fairer representation for leaseholders like yourself.

These changes, effective from March 3, 2025, make the RTM process more accessible and less costly. The RTM company will take over essential management functions such as repairs and maintenance, providing you with direct control over how your building is managed.

Financial Protections and Cost Reforms for Leaseholders

leaseholder financial protections reform

While the Leasehold Reform Act 2025 expands your management rights, it also delivers substantial financial relief through targeted cost reforms and new protections.

You’ll no longer pay your freeholder’s legal and valuation fees during lease extensions, though this applies only to extensions above a government-set premium threshold. Ground rent faces a statutory cap at 0.1% of your property’s value—meaning a £200,000 home can’t exceed £200 annually in ground rent. The reforms also aim to help you find affordable conveyancing solicitors who can assist you with these changes.

If you hold a lease over 150 years, you can buy out ground rent entirely. The cost equals the net present value of future payments using a 6% discount rate. For example, eliminating £300 annual ground rent over 80 years costs approximately £5,000.

The reforms also introduce standardised service charge documentation to provide clarity on calculations and spending, addressing one of the most common sources of leaseholder disputes.

These reforms directly reduce your leasehold costs while strengthening your financial position.

Service Charge Transparency and Improved Redress Mechanisms

Under the Leasehold Reform Act 2025, service charge transparency receives a thorough overhaul through standardized documentation requirements and enhanced information rights. You’ll now receive clear, detailed documentation explaining how service charges are calculated and spent, making it easier to challenge unreasonable bills and identify unjustified expenses.

The Act grants you powerful new rights under section 57 to request detailed information, including contracts, invoices, receipts, and written explanations of decision-making processes. This level of scrutiny wasn’t previously possible. Managing agents will now be required to hold mandatory qualifications to ensure professionalism and accountability in their handling of service charges and leaseholder communications.

Legal cost reforms remove the presumption that you’d pay landlords’ legal costs, even when winning cases. This makes challenging poor practice less financially risky.

Additionally, standardized “future demand notices” replace vague notification requirements, bringing much-needed clarity to the 18-month rule governing service charge timing.

Leasehold Restrictions and the Shift Toward Commonhold Ownership

The Leasehold Reform Act 2025 delivers its most transformative change by permanently banning new leasehold flats and establishing commonhold as the default ownership model. I’ll explain how this affects your property ownership rights.

Under the new system, you’ll gain direct control over your building’s management, budgets, and service charges. You’ll hold a freehold stake in your property, eliminating third-party landlords who previously profited from ground rents and improvement restrictions. The government’s Commonhold White Paper mandates this shift across England and Wales, ending the depreciating asset model that trapped many homeowners. Additionally, mandatory reserve funds will be required for all commonhold properties to ensure adequate financial resources for maintenance and repairs. This reform aligns with the need for legal advice in navigating the complexities of property ownership.

Your commonhold association will replace landlord-led management companies, giving you and your neighbors full decision-making power. This means you can approve building improvements, energy upgrades, and safety retrofits without lease restrictions blocking progress.

Implementation Timeline and What to Expect in 2025

Five key changes are rolling out throughout 2025 that’ll directly impact your property rights as a leaseholder.

The two-year qualifying period for lease extensions was removed on January 31st, 2025, meaning you can now start the process immediately without waiting. This applies retrospectively to all existing leaseholders.

Right to Manage reforms took effect March 3rd, 2025. You’re no longer liable for your freeholder’s legal fees in RTM claims, and the non-residential floor-space threshold increased from 25% to 50%.

However, full implementation will take years. A judicial review hearing is scheduled for July 2025, which could delay further changes. The government still needs to draft substantial secondary legislation and conduct public consultations before most provisions become active. The Labour Government plans to consult on lease extension pricing in summer 2025, with an uncertain timeline for effective reform likely taking longer than anticipated.

Conclusion

I’ve covered the major changes the Leasehold Reform Act 2025 brings to your property rights. You’ll gain easier access to lease extensions and freehold purchases, stronger financial protections, and better transparency in service charges. The shift toward commonhold ownership will give you more control over your property. While implementation’s still rolling out, these reforms represent the most significant leasehold changes in decades. Stay informed about timelines affecting your specific situation.