The new Leasehold and Freehold Reform Act of 2023, unveiled in November 2023, aims to enhance homeownership for leaseholders in England and Wales. Currently progressing through Parliament, this bill proposes significant changes to leasehold and freehold arrangements.

Initially outlined in the Conservative Party’s General Election manifesto, the bill aims to address unfair practices in leasehold agreements by facilitating lease extensions, and freehold purchases, and enabling leaseholders to assume building management responsibilities.

Overview of the current situation and the anticipated alterations:

  1. Understanding Leaseholds and Freeholds
  2. Proposed Amendments by the Leasehold and Freehold Reform Act 2023-24
  3. Ground Rent Explained
  4. Exclusions from the Bill
  5. Expected Implementation Timeline

Leaseholds vs. Freeholds: In a leasehold arrangement, homeowners own the property, not the land it occupies. Lease terms typically span between 99 to 125 years, with leaseholders obliged to fulfil various responsibilities, including maintenance fees, service charges, and annual ground rent payments to the freeholder.

Conversely, a freeholder, often referred to as a landlord, retains ownership of the land, building structure, and common areas. Their responsibilities encompass property maintenance, utility management, and collecting ground rents and service charges from leaseholders.

Proposed Amendments by the Leasehold and Freehold Reform Act 2023-24:

Building upon the objectives outlined in the ‘Fixing our broken housing market’ White Paper of 2017, the government seeks to introduce fairness and transparency for leaseholders. Key amendments proposed include:

  • Extending the standard lease for homes and flats to 990 years.
  • Eliminating the marriage value towards the end of the lease.
  • Streamlining the process of buying or selling leasehold properties.
  • Mandating transparency regarding service charges and administrative fees.
  • Abolishing the presumption for leaseholders to cover freeholders’ legal costs in challenging poor practices.

Additionally, discussions have ensued regarding the introduction of a ground rent cap for existing leaseholders.

Understanding Ground Rent: Ground rent refers to the fee paid by leaseholders to the freeholder for land usage. While the Leasehold Reform (Ground Rent) Act 2022 abolished ground rent on new leases, the Leasehold and Freehold Bill 2023-24 seeks to regulate ground rents for existing leaseholders. Options under consideration include capping ground rents, limiting them as a percentage of property value, or freezing them at current levels.

Exclusions from the Bill: Despite recent mentions in the King’s Speech, the bill’s original draft did not include a ban on new leasehold properties or extensions to the provisions of the Building Safety Act. However, the government intends to amend the bill during its parliamentary passage to incorporate these elements.

Expected Implementation Timeline: Initially published in November 2023, the bill is currently undergoing scrutiny in the House of Commons. It must also pass through the House of Lords and complete the legislative process before the General Election. Upon successful passage, the bill’s provisions will be enforced on a date determined by the Secretary of State.

This overview serves as informational guidance and does not constitute legal advice. For further details, refer to

If you require more information on Block of Flats Insurance call us on 01934 643400