Rushed UK leaseholder law contains ‘flaws’, ministers warn

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The UK has been forced to delay new leaseholder rules after ministers discovered “flaws” in a bill that was rushed through parliament before July’s snap general election. 

Flagship measures, which include making it cheaper and easier for leaseholders to buy their freehold, will be delayed while ministers hold a consultation next summer and then bring fresh legislation to fix the errors in the original law. 

Housing minister Matthew Pennycook said the current act accidentally excluded tens of thousands of shared ownership leaseholders from rights to extend their leases, as well as “a loophole which means the act goes far beyond the intended reforms to valuation and that undermines the integrity of the amended scheme”. 

These were among several “specific but serious flaws which would prevent certain provisions from operating as intended and that need to be rectified via primary legislation”, he said in a written statement on Thursday. 

The act was hurried through parliament — in what one peer called a “most reckless fashion” — on the final day before the legislature dissolved for the general election, which former prime minister Rishi Sunak called unexpectedly early. 

The leaseholder system sees about 5mn homeowners in England have the rights to their property for a fixed period, often paying fees and ground rents to a freeholder. 

The delays will frustrate leaseholders who have already waited years for action — and also face a renewed campaign by freeholders who argue the government plans to take away their legitimate property rights, and have threatened to sue for compensation. 

Harry Scoffin, founder of campaign group Free Leaseholders, said: “Today’s announcement delivers more of the same, a government seemingly unwilling to take on vested interests and paralysed by technocratic legalism and process.”

Pennycook said he “appreciate[s] fully the scepticism that leaseholders feel about yet more consultations” but that leasehold is “an incredibly complicated area of property”. 

“The risk of acting with undue haste is not merely a hypothetical one,” he added. 

Parts of the law that cover building safety are already in force, and Pennycook set out a detailed timeline for implementing the rest of the bill over the coming year. 

Labour has promised more sweeping reform, including a ban on new leasehold flats, tighter regulation for managing agents, and legislation to make an alternative tenure called “commonhold” the standard.

Pennycook said the government would produce a white paper on its plans for commonhold — in which each resident in a building owns their home and shares control of the communal areas — early next year, and new legislation in the second half of 2025. 

Natalie Chambers, director of the Residential Freehold Association, which represents freeholders, welcomed the government’s “recognition of the complexities around implementing leasehold reform, as well as the serious flaws in the legislative approach taken by the previous government”.