The Leasehold and Commonhold Reform Bill was announced in the King’s Speech today, culminating 14 years of campaigning by LKP, which revived Parliamentary interest in tenure reform.
This means the £250 ground rent cap is “expected” – the government’s word – in 2028 and commonhold, again expected, by 2029.
Along with a cheaper and easier process to extend leases and enfranchise by buying the freehold, these reforms will finish off the third party parasitical freeholder role entirely.
Of course, of key importance to existing leaseholders is to gain control of their money in the service charges, and bring dodgy run-away costs under their own control.
As LKP has argued for years, where leaseholders self-manage a site service charges are typically 20% less.
The government also promises “stronger protections agains excessive estate charges”, although how this is to be done is still to be made public.
The reinvigoration of commonhold is LKP’s achievement. It will be apparent first in new build sites, before existing leasehold sites convert over some years.
We organised our first session on commonhold in Parliament in 2014 trying to persuade a government that at that time had very little interest in the subject.
Professor James Driscoll, a property tribunal judge and LKP trustee who died in 2019, recalled his seminal book on commonhold published after the 2002 Act introduced the tenure, which sold more copies than there are actually commonhold sites in England and Wales.
Philip Rianey KC and Guy Fetherstonhaugh KC were meant to set out opposing views on the tenure, but as it happened both ended up arguing for commonhold.
It took LKP and the APPG on leasehold and commonhold reform until 2017 to persuade Number 10 that the commonhold legislation needed to move from the Justice Department to the Housing Department and be progressed.
The Law Commission project on leasehold reform took evidence from around the world on commonhold systems for its report published in July 2020.
Under the last government the plan was to add commonhold to the 2024 Leasehold and Freehold Reform Act as it passed through Parliament, but the early general election meant it was never introduced.
A draft Commonhold and Leasehold Reform Bill was considered by the MHCLG select commitiee earlier this year with their report due to appear soon.
The government has signalled that part of the Bill will involve setting a date for banning the sale of new leasehold flats and also creates the systems for conversion of existing leasehold stock.
There has been a lot of political and campaign hyperbole about how quickly conversion will happen. For all existing sites conversion involves a democratic process where the leaseholders will have to choose when and how they convert.
The processes for those who cannot afford or do not want to convert will be key. The protections set out in the 2024 Bill are also essential to help keep the costs of conversion down.
Related posts:
For first time in 14 years, Westminster hears more of commonhold
Housebuilders WILL benefit from commonhold, Hopton Build developer tells Law Commission
Sort out enfranchisement, or existing leaseholders will be left behind in the commonhold future
Housing Bill omits necessary ‘changes to leasehold and commonhold’
LKP persuades government to allow commonhold tenure on Help To Buy
Court of Appeal gives freeholders the go-ahead for round two of judicial review
“As LKP has argued for years, where leaseholders self-manage a site service charges are typically 20% less.” Is there evidence or examples that support this? We have a strong RA and on our analysis we feel that it has achieved as much cost cutting as possible, and cannot determine where RTM would acieve any more.
Here is an obvious example of a self-management RTM/RMC/CA cost saving. Self-management volunteer company directors altruistically doing estate or building management administrative work for free instead of paying a Management Company Managing Agent staff to do that work will generate savings. If our estate RMC Managing Agent, Premier Estates was replaced by self-managing volunteer directors, they would save 10% of the estate service charge which is £370,000 per annum of which £37,000 is paid to Premier Estates as a “Management Fee”.
Are you saying that under RTM there would be no need for a managing agent?
I’m a director in a smaller block of flats, 36 of them. We have tried both with our without external agent but found that with the “professionals” involved we gained precious little. As they are indemnifying themselves from all mistakes it was soon found to be just another cost, and actually time consuming for dirctors to keep on top of to keep things running and within budget.
Size is important here I think, larger properties with hundreds of flats would likely need both acting agents and part time janitors, but smaller ones like ours can function with a small group of dedicated leaseholders calling on outside help when needed. Book keeping is outside of course, and we have also gone for leased boilers taking a lot of stress away while having more financial stability and predictability. Longer energy contracts help there too.
That isnt really a saving. Some leaseholders volunteer their time and take on risk of being personally sued so other leaseholders benefit.
We collectively purchased our freehold but still hire managers as its a lot of work to keep up with regulations if you are a larger building.
Mr D’Urban,
I was one of the co founder directors of a RTM company, Our residence consists of 21 apartments arranged over 2/3 floors, The property is about 39 years old and was built, in my opinion, to a good standard.
We achieved the Right to Manage almost four years ago and witnessed a substantial reduction in service charge some where in the region of 39%. The biggest contributions towards that cost reduction came by way of the selected property managment agents fee, was around half the previous agents and the buildings insurance, from memory, was halved once we had shopped around for a like for like competitive quote.
We prided ourselves in maintaining the property inline with the terms of our lease and because it is our home and not a long term investment opportunity.
I still have in my possession my notes regarding cost downs achieved in £ and % terms, the reductions at the time were staggering in my opinion, and the property had not been so well maintained in the many years my Wife and I have called this our home.
Major Leasehold Reform Omission: 1988 Order Must Be Amended
As leaseholders, we are constantly squeezed by rising service charges, yet the law actively works against our long-term financial security. The Service Charge Contributions (Authorised Investments) Order 1988 forces Management Company (ManCo) directors to hold our hard-earned reserve funds entirely in low-yield bank or building society trust accounts.
While this was designed for safety, it now guarantees that our sinking funds lose real-world purchasing power. Construction and materials inflation consistently outpaces standard bank interest. When major works like roof replacements are due, the reserves inevitably fall short, triggering crippling “special levies.”
The UK Government must amend the 1988 Order to permit a regulated, “two-tier” investment approach. Funds required within five years should remain in cash for immediate liquidity. However, long-term reserves held for 10-to-20-year lifecycles should be eligible for low-risk, growth-focused asset portfolios.
Leaseholders deserve the same compound growth protections as pension funds. Modernizing this archaic rule will finally allow ManCos to responsibly combat building cost inflation and reduce the annual financial burden on residents.
Matthew,
A couple of years ago we had over £ 86,000.00 in the reserve fund (contingency / floating fund ) a week or two before financial year end. That may not seem much to some, but when you consider the budget for that year was less than £49k it helps to put the financial health of this RTM into focus. In March 2024 we had received £761.38 by way of interest income, It is clear that had we been permitted to properly invest that money a far better return would of been achieved
Yes, it’s time these greedy ground rents that just double were stopped. (I’ve just been hit with this!) Also, the service changes are way over the top.
It will make properties much more appealing and remove the fear of unfair, unrealistic future increases that the average person just can’t afford.
At last, something to look forward to! However, will retirement living leasehold properties be included in the proposed ground rent cap?
14 years! Plus another 3 at least before anything is settled. As the previous reply stated..is leasehold retirement property going to be included? Sadly it will all be too late for me. I’ll probably be dead and buried before I can take advantage of any changes!
I live in a block that has 5 flats, the service charge is so high that selling on is difficult. myself and another Lessee who owns the 2 flats above me have already costed the service charge were we to enfranchise. It would reduce our bill by nearly 40%!. This news is very gratefully received and has taken since the 1970s to resolved!
We’re a 2021 new-build block of eighteen apartments and claimed our right to manage from a large Housing Association.
Services charges in 2021 were £120/mth. The HA let them rise to £335 in 2025. Cleaning alone rose from £7,000 to £21,000 because the contractor just kept putting in a big annual increase which the HA didn’t challenge.
After RTM, our service changes dropped to £150 / mth. We appointed a professional managing agent and chose reputable contractors who offered good value.
In my 2024 survey there was little evidence of lower service charge in RTM blocks. What there was however was better management and happier flatowners. I can double check the numbers but that figure of 20% would have leapt out and it didn’t.
Haward,
On the 24th January 2024, I carried out a comparison of service charge costs for this Right to Manage residence, compared to others who were not (to the best of knowledge and belief), which are located within a 5 mile radius of our home. The compared property’s had all been constructed around the same time, the apartments had the same facility’s available, and are of similar square footage. Please find below results, you may note I have not included the property name simply a number, and the service charge currently due or being paid from highest to lowest per annum in that time period.
Property;
1. £4,657.58
2. £4,398.84
3. £3,761.33
4. £3,272.95
5. £3,170.76
6. £2,761.32
7. £2,743.28
8. £ 2,373.96
9. £1,960.00
10. £1,379.00
.
Property 8 is the residence that my Wife & I call our home. Please draw your own conclussons based on the above analysis on the benefits of Right to Manage. I hope the above information is of some use
Thank you Stephen, much useful.
Questions, is this all in an area where property prices are in the high end of the market, like for example most of London is? You say all similar size, would you be happy to give an indication on this?
Elisabeth,
The listed properties are in the Blackpool and Fylde Coast area, prices vary. The apartments are typically over 400 to 480 square foot and usually include a lounge, kitchen, bedroom, and bathroom or shower room. Most also benefit from a communal entrance with intercom or key fob access, emergency pull cords throughout, a communal laundry, residents’ lounge, guest suite, communal gardens, and free off-street parking.
Thank you again Stephen.
I think in London where I live we are used to considerably higher service charges, ture also for much smaller flats. Guess it’s London.
Your comparison is still indicative of savings on taking on the management yourselves through either an RTM or an RMC as we are. (And no, we don’t own the freehold)
Thank you LKP for making this change in the Law happen. It is much needed.
Going back to Benjamin D’Urban initial question. We had one of the well know managing agents looking after us. The annual service charge cost was circa £2500 +VAT, following FTT we took over the management, we initially expected to drop the cost to £1000 p.a. We collected £500 in the initial payment, we expected to collect the other £500 half way through the year. At the end of the year we put the balance of the initial £500 into a sinking fund. We never needed to collect the remaining £500. We are still ironing out issues, but remain at a loss to understand the justification for the £2500.
We are now completing our third year managing. The service charge has remained at £500.
Alastair R,
Congratulations on that astonishing service charge reduction and the immediate savings that you have achieved on behalf of your neighbours and your good self.
Are you able to elaborate more?
We are all aware that this “unregulated industry sector” is “infested” by many “Fly by Night” firms who are endorsed by many trade organisations that turn a “blind eye” to what is, in my humble opinion,, is a perfectly “Legal Fraud on an “Industrial”scale.
I was responsible for assisting in a RTM application in a small development in Lancashire and formed a VAT registered company in which we were able to recover significant sums of input VAT amongst other things saving the leaseholders large sums. The point is that the former management company appointed by the offshore freeholder was not declaring the recovery of the input VAT to the leaseholders in the annual accounts and was simply trousering these sums via a sister company controlled by a holding company which owned the management company. I believe that this fraud is widespread to an enormous scale. When this issue was raised in the 1st tier property tribunal in Manchester it simply closed its eyes to this egregious scam.
David,
“FREEHOLDER CAMPAIGN GROUP REFUSES TO REVEAL BACKERS’ IDENTITIES”
I have just read an article published today in “The Negotiator” by David Callaghan under the headline above. The “Campaign Group” state under It’s polished logo and carefully written reply to questions asked, that give the impression that it is defending my rights as a Leaseholder, though for reasons known only to the group iteself or whoever created the expensive looking branding.
The article states that “a new group set up to fight for freeholder rights has refused to tell the Neg who its supporters are.”
Richard Merrin, CEO, of Spreckley PR, is quoted as saying, “We are not releasing the funders names”. The article adds that Justice for Property Rights is taking legal advice on bringing a collective action against the Government before the European Court of Human Rights.
My central question is this: who are the funders, and why are their names being withheld?. To me, the answer seems fairly clear. Others may disagree, but if so, I would ask them to identify themselves clearly by namme and explain whom or what they represent.