Stamp Duty

• From the 1^st April, the SDLT nil rate band threshold will fall from £250,000 to £125,000 (returning to 23 September 2022 rates) and SDLT will (as before that date) be chargeable at 2% (or where the higher rate on additional dwellings and/or non-UK resident surcharge applies, an additional 2%) on the difference.
• First time buyer’s relief will only be available where the purchase price of the property does not exceed £500,000 (down from the current cap of £625,000); and the current £425,000 nil rate band first-time buyer’s relief threshold will fall back to £300,000 (with the difference being chargeable to SDLT at 5%).

Leasehold and Freehold Reform Act 2024

• On 31^st January, the Leasehold and Freehold Reform Act 2024 (Commencement No 2 and Transitional Provision) Regulations 2025 (SI/2025/57) came into force. Previously, leaseholders had to own their property for two years (known as the “qualifying period”) before they could extend their lease or purchase the freehold of their property. This is no longer applicable. The change applies retrospectively, meaning that it is not limited to leases granted after 31 January 2025. Housing Minister Matthew Pennycook has stated that this is an initial step towards the overhaul of the leasehold system and that the Labour government will continue to implement the measures set out in the Leasehold and Reform Act 2024.
• There will be further consultations in 2025 regarding service charges and costs, valuation rates for enfranchisement and commonhold.

The Renters’ Rights Bill

• Regulated providers of social housing will be affected by the following changes:
• – The end of assured shorthold and fixed term tenancies
• – Tenancies over 7 years won’t be assured tenancies.
• There will be further changes to the grounds for possession.

It is clear that 2025 is going to be a busy year for legal practitioners and property stakeholders with the Government seemingly serious about initiating a series of changes, some of which will be quite radical.

Please contact our expert Property Lawyers for assistance with any Residential Conveyancing enquiries.

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What are the key takeaways from the Act?

• Increases the standard lease extension for both houses and flats to 990 years.
• Makes it cheaper for leaseholders to extend their lease or exercise their collective enfranchisement rights.
• Bans the sale of new leasehold houses (with certain exemptions).
• Removes the two year ownership requirement before the right to extend or buy the freehold can be exercised.
• Increases the pool of leaseholders who can exercise enfranchisement or Right to Manage rights by changing the percentage of commercial floor space from 25% to 50%.
• Increases the transparency of service charges.

Notable things which did not make the Act

No amendments were made to restrict ground rent before the Act received Royal Assent. There had been Law Commission consultations on potentially capping ground rents at £250 per annum, or reduce them to zero, and the Act is seen as underwhelming by many.

Another notable omission from the bill is the prevention of forfeiture, a draconian measure which can possibly be exercised by freeholders to bring the lease to an end.

There is currently no commencement date for the Act and it will be for whoever forms the next Government to decide on when it will be implemented. There may also be further reform.

If you require advice relating to the above, or any property matter, please contact our expert Property team who will be happy to assist.

Article written by Residential Conveyancing Solicitor Ben James.

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The complexities of the government’s leasehold reform proposals affecting millions of homeowners came under the spotlight at a seminar organised by Coventry and Warwickshire’s law firm Brindley Twist Tafft & James and property experts ehB Residential Surveys.

Forty invited guests – including estate agents, surveyors, private finance advisors and conveyancing lawyers were among those who attended the event at the Warwick Arms Hotel on Tuesday.

The event follows Michael Gove’s plans to shake up England and Wales’s ‘feudal’ leasehold system were announced in the King’s speech in November.

Gove said the proposed leasehold Reform Act would overhaul the system and prevent developers from selling new houses under leasehold, ensuring a fairer deal for leaseholders.

It would also make it easier and cheaper for leaseholders to extend their lease agreement or buy their freehold, giving them more control of the land on which their property is built.

Alex Khan, Partner and Property Solicitor at BTTJ said the problems within the current system are compounded by issues such as multiple ground rents – the charge for renting the land from the freeholder – diminishing lease terms, excessive insurance commissions and overcharging of service charges.

Under the current legislation the standard lease extension term is currently 90 years. The proposed new legislation will increase this to 990 years – saving leaseholders the headache of a long, complicated and expensive process of extending leases which can cost thousands of pounds.

The reforms also aim to ensure service charges and ground rents are transparent and reasonable.

The Conservatives have also promised greater transparency of the system, the banning of excessive insurance commissions and an end to the requirement for a new leaseholder to have owned their property for two years before being able to extend the lease or buy the freehold, resulting in a rising premium.

They have pledged to remove the ‘marriage value’ cap meaning leaseholders with less than 80 years left on the lease will no longer have to share the hypothetical profit of the property with the freeholder, meaning they could potentially benefit by thousands of pounds.

Alex Khan said the government is also proposing to allow leaseholders of mixed use properties with up to 50 per cent of non-residential floor space to buy the freehold and manage the building, a move which Mr Khan said would allow residential tenants who live above a business, but have no experience in commercial property, to manage their entire building.

“Often referred to as ‘fleecehold’, leasehold is a diminishing asset.  It was first brought about by barons who would finance their crusades abroad by leasing their land to tenants for a peppercorn rent on the basis they knew the land would always be theirs. The system itself actually does work but in the last 20 years it has been abused, so what used to be an £8 ground rent is now £300, £500, going all the way up to £10,000 for the lifespan of a lease, and it prevents people from selling a property so the system has spiralled into an abyss.”

Jonathan Selby explored a number of options which may be implemented by the government, including abolishing the marriage value or introducing a ground rent cap either at 0.1 per cent of the property value, or at £250.  Other option included re-setting the ground rent to the initial ground rent set out in the lease or freeze it at the current value.

He said: “Mr Gove says he will have all of this in place before the general election scheduled for later this year, but realistically I think we could still be talking about this in four or five years’ time. The legislation that may go through may be so watered down that it barely affects anyone at all.”

Conversely labour says it would scrap the leasehold system altogether within if it wins the general election.

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