The Future of Leasehold Reform

The 4.9 million residential leases in England and Wales could face significant change if new legislation is announced as promised next month. Almost 80% of lawyers and property professionals support change, but the complete abolition of leasehold would be impossible in one move and politicians should be realistic about this with the public, according to the professional body, ALEP.

The Government is committed to leasehold reform and plans to bring forward a Leasehold Reform Bill in the King’s Speech on 7 November.

Furthermore, sources state that the Labour party has committed to abolishing all residential leasehold within 100 days if it is successful in winning next year’s general election.

It is widely acknowledged that the current leasehold system is in need of reform. The Association of Leasehold Enfranchisement Practitioners (ALEP) is a professional body representing over 1,200 solicitors, barristers and surveyors who work in leasehold enfranchisement. At ALEP’s annual conference on 12 October, members were asked ‘In general, is the leasehold system in need of reform?’. No fewer than 77.37% responded ‘yes’; 21.17% said ‘no’, and only 1.46% had no opinion.

Commenting members’ strong endorsement of change, ALEP director Mark Chick said, “We regularly survey experts within ALEP on their inclination towards reform, and the 77% in favour at last week’s conference is the greatest support to date.

“The 1967 Leasehold Reform Act was enacted in a different era: when the average house price was little more than £2,000 and homeownership was just 48%; before technological, social and economic changes transformed the property market.

“Although the Leasehold Reform (Ground Rent) Act 2022 introduced legislation to ban ground rents on new leases, there are a number of other un-resolved Government pledges still to be met. These include the promise to ban the creation of new leasehold houses. The Government has also committed to abolish ‘marriage value’ (an additional charge payable by the leaseholder when the lease they are extending has fallen below 80 years).

“We fully support the Government aim of making the process cheaper and easier for leaseholders. But we question how this will be achieved and whether such complex legislation will realistically gain Royal Assent before the next general election.”

On the potential abolition of leasehold, Mark Chick comments, “It has been said that the Labour party would abolish leasehold in its first 100 days. In reality, that is impossible: leasehold is an incredibly complex area of the law which has developed over centuries and impacts on almost 5m people. It cannot simply be abolished and replaced within a few weeks.

“It is vital that Government consults upon and takes a considered approach to all aspects of potential reform, rather than rushing out unfinished or extemporaneous legislation that is not fit for purpose, and which could cause unintended confusion and harm – we do not wish to see a repeat of some of the issues that have arisen following the recent Building Safety Act.”

ALEP has had an influential role in reform previously and intends to contribute constructively to future discussions. As an apolitical body, representing diverse views throughout both the legal and property professions, it hopes to continue to support politicians and policy-makers as future changes are considered.