Big change to leasehold rules from next week and it could save homeowners £3,000

HUGE changes to the rules around how leasehold properties are managed will kick in from next week in great news for homeowners.

The government is pushing through reforms that will allow more people who own leasehold homes to take control of the property's management.

This will include giving more people access to the "Right to Manage" scheme, which allows residents to effectively take over the managing their building together.

Access to this process is currently quite restrictive. For example, anyone in a mixed-use development where 25% or more of the space is used for commercial reasons can't use it.

But this minimum is being increased to 50% to allow more people to access Right to Manage.

The government will also remove the requirement for leaseholders to cover freeholders' legal frees during Right to Manage claims.

This is expected to save leasehold homeowners up to £3,000, the government said, removing the cost barrier.

The new rules form part of the Leasehold and Freehold Reform Act 2024 and will be introduced next week, with them set to come into force from March 3 this year.

What is a leasehold home and what is the issue?

A leasehold tenure means you buy the right to live in a home for a set period of time, but you don't own the land it's on.

This is compared to a "freehold" tenure, where you own the property and the land it's on.

Leasehold tenure tends to be more common for flats, although some new-build housing developments are leasehold too.

Leaseholders usually have to pay ground rent to the landlord - or "freeholder" - often on top of other maintenance or service fees for the upkeep of communal areas.

Historically, leaseholders have had little say over how much they pay in service charges or what the fees are used for.

Oversight of things like repairs and general maintenance are often delegated to a management company or other third party.

But the new changes, which are being fast-tracked so they come in earlier than expected, will give homeowners more rights to take over management of their property from these third parties.

You can read our guide to leasehold properties and how they work here.

These changes were announced alongside new reforms to the way homes are sold and bought which aim to make the process "quicker and cheaper".

Yesterday, the government announced it will modernise the sale process to help bring down current delays of up to five months and reduce the number of sales falling through.

This will involve sharing property data between professionals such as conveyancers and mortgage lenders and introducing a digital ID service.

Matthew Pennycook, housing and planning minister, said: “Our modernisation of the system sits alongside further reforms to improve the lives of leasehold homeowners across the country, allowing them to more easily and cheaply take control of the buildings they live in and clamp down on unreasonable or extortionate charges."