It should be noted that the government has been considering reforming law within the leasehold market since 2017. Many leaseholders have since been querying whether to wait on the reforms, with the hope that it will put them in a better position in relation to their lease.

The Leasehold and Freehold Reform Bill was announced in the King’s Speech on 7th November 2023 to ‘give homeowners a fairer deal, and greater rights and protections.’ The Bill proposes various rights for homeowners including ‘Making it cheaper and easier for people to extend their lease’ and ‘Increasing the standard lease extension term to 990 years for houses and flats’.

On a positive note, the Bill has now had it’s first and second readings in the House of Commons. The Bill has gone through the committee process, and now needs to be reported to and agreed by the House of Commons – this has been scheduled for 27th February 2024. Following this, the Bill will be debated in the House of Lords too, and we can only hope that the Bill will make its way through the House of Commons and the House of Lords in a year.

Whilst it appears that progress is being made in relation to the Bill, it is still very difficult to advise clients on whether to extend their leases or hold off until the reforms come into force. We can only present the information we know and let clients make their own decision depending on their individual circumstances. At this stage, we don’t know the impact of the proposed reforms, or whether they will definitely come into force as presently outlined.

We have outlined a couple of circumstances in which we would advise that you proceed to extend your lease, rather than wait on the reforms. However, the final choice can only be yours:

  • If you are seeking to sell or re-mortgage your property and are facing issues due to the existing lease term e.g. your existing lease term falls below 90 years – you should proceed to extend your lease, as a lease extension is likely to be required by most prospective purchasers and lenders.
  • If your lease is around the 80-year mark, it is highly unlikely that the reforms will pass before your lease drops below 80 years; at which point marriage value will make it more expensive for you to extend your lease under the current legislation.

Prior to the King’s Speech, leasehold reform has been elusive, and many leaseholders have found that proceeding with their lease extensions has been a good call to date.

At present, it is highly unlikely that any changes to the law will come into effect until 2025 at the very earliest. If a general election is called before the Bill passes through Parliament, then leaseholders could potentially be left waiting even longer. Any new government will have their own housing agenda, and leasehold reform may or may not be on the top of the list. There is also no guarantee that any future government will commit to the reforms as presently outlined on the government website:

https://www.gov.uk/guidance/guide-to-the-leasehold-and-freehold-reform-bill