A little less conversation, a little more action

Welcome to 2025, and to my annual predictions of what will happen in residential property law this year. The government says it is not happy with the current state of the law, but what will it actually change? Is there a new dawn or will the can be kicked further down the road?

Leasehold reform

The consultation on reforming enfranchisement law, reinvigorating commonhold and overhauling the right to manage began in 2018. Ambitious proposals for reform were published by the Law Commission as long ago as 2020, culminating in the Leasehold and Freehold Reform Act 2024 being rushed through in the “wash up” before the general election in July last year. However, to date, few of the new Act’s provisions have been brought into force. Will that change in 2025?

The government’s press release in November announced that the uncontroversial removal of the “two-year rule” (which requires a leaseholder to own their flat for two years before applying for a lease extension) will come into force in January, and that the relatively modest changes to the right to manage will follow in the spring. Beyond that the announcement consisted largely of can kicking. The declaration that “before the end of the year” the government will have consulted on various provisions in the 2024 Act (including valuation rates) suggests that the long wait for “cheaper, quicker and easier” enfranchisement is not over yet.

Many lease extension claims have been stalled while leaseholders await the abolition of “marriage value” from the premium to be paid for their new lease. The continued delay to the reforms may well see an increase in claims as lessees decide they can’t wait any longer.

Commonhold

The government is keen on the idea of commonhold and intends to publish a “landmark draft Leasehold and Commonhold Bill” in the second half of this year. However, prior to the Bill, a commonhold white paper will be published, to be followed by a consultation on banning new leasehold flats. We have been here before, and I think it is safe to say that leasehold will still be with us throughout 2025. Interestingly, the government also intends through this Bill to remove the threat of forfeiture as a means of ensuring compliance with a lease agreement (though this is likely to be only in a residential, and not commercial, context). Forfeiture is undoubtedly a draconian remedy, but existing restrictions mean that it is only really useful in extreme cases of breach.

Renters’ rights

The Renters’ Rights Bill replaces the Renters (Reform) Bill 2024 and is expected to come into force in the summer. The headline changes are the abolition of so-called “no fault” evictions and all tenancies being made periodic rather than for fixed terms. Under the new legislation, a tenant will be protected from eviction for the first 12 months of their tenancy, provided they don’t break the terms of their tenancy agreement. After that, if the landlord wants to sell or move into the property, they will need to give the tenant four months’ notice. Tenants will be able to challenge unreasonable rent increases in the Firsttier Tribunal, and landlords will only be allowed to raise the rent once a year and only to the market rate. The new Bill extends the minimum amount of rent arrears that a tenant must be in before a landlord can serve notice to obtain possession from two to three months. In addition, the minimum notice period will be increased from two to four weeks. In practice, this means that a landlord will need to wait until the tenant has not paid rent for four months before they can even start proceedings to terminate a tenancy. The Bill will prohibit “bidding wars” by requiring landlords and letting agents to publish an asking rent for their property. It will then prohibit them from asking for, encouraging or accepting any bids above this price – this sounds like a recipe for higher asking rents. It is also proposed that landlords will be prohibited from unreasonably refusing to allow a tenant to keep a pet.

Housing ombudsman

In addition, it is proposed that a new housing ombudsman be introduced for the private rented sector to provide a convenient forum for repair disputes to be dealt with in a timely and pragmatic manner. Building Safety Act 2022 In December, the government published its “Remediation Acceleration Plan” to tackle the delay in completing safety works. The three key objectives set out in the plan are to:

1. fix buildings faster;

2. identify all buildings with unsafe cladding; and

3. support residents.

The intention is to lay down clear timescales for the completion of remedial works to buildings over 11m high with “significant financial consequences for inaction”. New legislation is proposed to provide the secretary of state and regulators with “powers to compel entities to disclose their beneficial ownership chains”. The plan also proposes further new legislation which will require mandatory registration of all residential buildings between 11m and 18m in height, together with the “strongest possible penalties” for those that do not comply. In support of residents, the plan also proposes:

• amending the Landlord and Tenant Act 1987 to make it clear that a courtappointed manager can also be responsible for building safety duties, which will allow remediation funds to be provided to court-appointed managers who can then progress remediation.
•  publication of a new consultation on introducing permitted insurance fees for landlords, freeholders and property managing agents. This seeks views on proposals to prevent freeholders, property managing agents and landlords from imposing opaque and excessive charges on leaseholders related to building insurance; and
• extension of the Waking Watch Replacement Fund until the end of March 2026.

Lots of questions

So there is a lot in the pipeline, but with the plethora of “consultations” it remains to be seen how many of the proposals will reach the statute book in 2025. If the proposals become law, no doubt there will be many applications to the courts and tribunals to work out what the new statutory provisions all mean.

This article was written by Nicola Muir and first published by Estates Gazette