Introduction:

In the recent King Speech Leasehold Reform (July 2024), the Government of the UK has announced a lot of changes in the previous reforms by addressing the problems. This is the more awaited step expected by home owners, free holders and millions of lease holders. It’s been a long time lease holders are facing a lot of issues with soaring ground rents, service charges and complexity of extending their lease. These reforms promise to address the difficulties and make the leasehold system more easy and transparent. But what exactly do these changes entail, and how will they impact homeowners and the property market?. In this article we will break down the key changes and their impacts on leasehold owners. 

What is Leasehold Property?:

Ownership of property in the United Kingdom is divided into two categories: leasehold and freehold. If you own a freehold property, it means you are owning the whole property as well as the land. However, for the leasehold property, you only own the property for the decided timeframe which is typically decades but land is always in the custody of the freeholder also known as the landlord.

Mostly flats, apartments and some new build houses fall under the category of leasehold. Leasehold is a long term rental agreement. However, as part of the deal you’ll have to pay ground rent to the landlord, service charges for repairs and maintenance. Overtime, the lease gets shorter which will result in a reduction of Home’s Market Value. 

To stop this, you’ll need to extend the lease, but right now, that means jumping through expensive legal hoops—something the new reforms hope to change.

One of the biggest concerns with leasehold properties is that leaseholders often face unfair terms, such as unregulated and unaffordable ground rents or expensive permission fees for minor home improvements. The updated King Speech Leasehold reform aims to address these issues, making leasehold ownership fairer and more transparent.

Current Problems with the Leasehold System:

The Hidden Costs Trapping Leaseholders

The British leasehold system has become a financial disaster for homeowners, with default disadvantages that are continuously beneficial for freeholders. Let’s break down exactly how the system is harmful for leaseholders:

1. Unaffordable Ground Rents
   The worst rule from leases that allow ground rents to double every decade. A property starts with a reasonable £200 annual payment can increase to £6,400 after 50 years – turning dream homes into financial nightmares. Recent cases show properties becoming virtually worthless when ground rents hit four figures.

2. Service Charges With No Accountability
   Leaseholders regularly face bills that:

• Don’t specify where money is being spent
• Include mysterious “admin fees” adding 20% or more
• Cover unnecessary renovations at high prices
  With no proper regulation, challenging these charges becomes an expensive battle which can’t be afforded by everyone..

      3. Permission to Live Normally
            Freeholders always:

• Demand £1,000+ just to approve a new bathroom
• Ban pets or demand annual “pet rent”
• Take week/months to respond to simple requests
  It’s a system where homeowners need permission to truly feel at home.

These structural flaws have created a two-tier housing market, where leaseholders pay dearly for what freeholders take for granted. The 2024 reforms are favourable for both landlords and leaseholders.

Key Changes Proposed in the King’s Speech:

The King Speech Leasehold Reform 2024 finally gave hope for leaseholders who are being trapped in this leasehold system. The proposed reforms are more transparent and clearly supported to balance the rights of tenants and landlords . Here’s what’s set to change:

Ground Rent Abolished for New Leases

• No more doubling of ground rents or financial disaster
• Existing leases may see rents reduced to the lowest extent.
• Future homeowners protected from predatory contracts

Cheaper, Simpler Lease Extensions

• Marriage value abolished – saving leaseholders £10,000s
• Standard 990-year extensions proposed
• Reduced legal and valuation costs

Service Charge Transparency

• Mandatory detailed breakdowns of all costs
• Right to challenge unreasonable fees
• Bans on commission for managing agents

Commonhold Reform Bill: 

• Government backing for this fairer ownership model
• No more ground rents or permission fees
• Genuine control over your own home

Impact on Leaseholders and Freeholders:

The changes in leasehold reforms will greatly balance power between homeowners and landlords. For leaseholders, it means finally escaping unaffordable ground rents and unfair service charges while gaining real control over their properties. Extending leases becomes simpler and cheaper, removing a major financial hurdle. Freeholders must adapt to losing lucrative income streams from inflated fees and permissions. However, responsible landlords can still profit through transparent service charges and professional management.

Ultimately, these changes create a fairer system for all. Leaseholders gain security in their homes, while freeholders transition to more sustainable business models. The reforms don’t punish landlords but rather reset broken dynamics, encouraging healthier landlord-tenant relationships across the UK property market.

How Surveying Corp Can Help You Navigate Leasehold Reforms:

The King’s Speech reforms mark a turning point for UK leasehold – fairer terms for homeowners, clearer rules for landlords, and long-overdue fixes to a broken system. While the changes bring welcome relief for many, they also create new complexities for property owners navigating this transition.

Here’s the good news: You don’t have to figure it out alone.

At Surveying Corp, we’re more than just property managers.

We are your strategic partners in adapting to these reforms. Our team specializes in:

• Leasehold Reform Compliance – Ensuring your properties meet all new requirements
• Cost Optimization – Maximizing value while operating within the new rules
• Future-Proof Strategies – Developing management approaches for the post-reform market

FAQ’S

Q: Will the reforms help me if I already have a bad lease?
A: Yes! Existing leases will benefit from:

• Ground rent reduced to peppercorn rates
• Cheaper lease extension processes
• Stronger rights to challenge unfair charges

Q: How much will lease extensions cost under the new system?
A: Costs should drop significantly.  We are seeing estimates of 40-60% reductions by eliminating marriage value. Exact savings depend on your property.

Q: What happens to freeholders under these changes?
A: Responsible freeholders can still operate profitably through:

• Fair service charge models
• Professional management fees
• Value-added services for residents

Q: Should I extend my lease now or wait for the reforms?
A: It depends – factors like:

Urgency of your situation

Your lease length (below 80 years?)

Property value