RICS welcomes progress on leasehold reform

RICS says that government plans to reform the leasehold market will bring much-needed clarity as to what the future holds.

Last week Matthew Pennycook, Minister for Housing and Planning, provided an update on the next steps to reforming the leasehold market.
Key announcements included removal of the ‘2-Year Rule’ (January 2025) to allow leaseholders to extend their lease or purchase their freehold immediately after acquiring their property.

It also said Right-to-Manage Provisions (Spring 2025) will make it easier for leaseholders in mixed-use buildings to assume management responsibilities from freeholders.

LEASEHOLD AND COMMONHOLD REFORM BILL

It also announced the introduction of the Leasehold and Commonhold Reform Bill (Second Half of 2025) to establish commonhold as the default tenure type by the end of the current parliament.

The government has also committed to launching consultations on several key issues to support the reforms including Building Insurance Commissions which will ban commissions for landlords, property managers, and freeholders, replacing them with fees.

The government also plans to introduce mandatory professional qualifications for managing agents to enhance service quality and boost leaseholder satisfaction, with consultations set to launch in 2025.

UNCERTAINTY
Mairéad Anne Carroll
Mairéad Anne Carroll, RICS

Mairéad Anne Carroll, RICS Senior Specialist, says: “Following the passage of the Leasehold and Freehold Reform Act before the General Election, the market faced significant uncertainty regarding the timing of reforms.

“We welcome the Minister’s announcement, which provides much-needed clarity and helps the sector prepare for these changes.

“Strengthening leaseholder rights is central to these reforms. RICS has been actively working with the government to support this agenda, including through the Secretary of State-approved RICS Service Charge Code, which promotes best practices in the management of fees and leaseholder services and the development of a Block Management Sector Code which would provide consumers with much-needed clarity on the role and responsibilities of managing agents.”

BENCHMARK

And she adds: “RICS sets the benchmark for managing agents through our rigorous professional qualifications, mandatory standards, and regulatory frameworks.

However, not all managing agents belong to professional bodies, creating gaps in competency and consumer protection.

We are encouraged by the government’s intention to mandate qualifications across the sector and urge them to collaborate with established organisations like RICS to implement these frameworks effectively.

GROUND RENT CLARITY

“We have called on the government to prioritise clarity around ground rent reforms. Publishing the outcomes must remain a key focus to support leaseholders with purchases and enfranchisement decisions and provide investors with the certainty needed to plan future investments.

“RICS is committed to supporting the government in shaping reforms that prioritise professionalism and leaseholder rights while building on the best-in-class structures we have developed.”

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