A major shake-up of leasehold laws is set to revolutionise the way leaseholders deal with service charges from 2027. The government's overhaul, under the Leasehold and Freehold Reform Act 2024, will bring much-needed transparency to the often-opaque world of property management, empowering leaseholders to scrutinise costs like never before.
Key changes include a requirement for landlords to provide detailed breakdowns of how service charges are calculated and spent. This includes an annual report on building condition and major works, as well as a standardised form detailing the cost of each service charge. Leaseholders will also gain new rights to challenge expenses and request supporting documentation dating back up to six years, with landlords obligated to respond within set timeframes.
Housing Minister Matthew Pennycook said these reforms are part of a broader shift away from traditional leasehold towards a commonhold future, ensuring existing leaseholders aren't left behind. He stated: “We're acting to enable more existing leaseholders to take control of their buildings and convert to commonhold as they see fit, while strengthening protections for those in the here and now by driving up service charge transparency and rebalancing legal costs.”
The government has also launched two public consultations on enfranchisement reforms, including setting specific valuation rates to reduce disputes over lease extensions or freehold purchases. Crucially, these reforms will protect leaseholders from having to cover their landlord's solicitor fees, making home ownership more accessible and affordable.
These measures are designed to complement the forthcoming Commonhold and Leasehold Reform Bill, which aims to ban new flats from being sold as leaseholds and cap ground rents at £250. While these reforms have been welcomed by many, property experts warn that landlords and managing agents will need to adapt to a more transparent operating environment, with robust record-keeping and clearer audit trails now essential.