Housing reform has been placed firmly at the center of the government’s legislative agenda after King Charles I used the King’s Speech to unveil a series of housing-related bills for the coming year.
Speaking in the House of Lords, the King outlined plans for 37 new bills in the next parliamentary session, with the most significant measures affecting the property sector including leasehold reform, social housing and building safety.
One of the key proposals is a new Commonhold and Leasehold Reform Bill, which would ban the sale of new leasehold flats in England and Wales and impose a cap on ground rents at £250 per year.
The move represents the latest stage in a long-running overhaul of the leasehold system and is likely to have major implications for developers, freeholders, managing agents and lenders. Ministers argue the changes are designed to simplify property ownership structures and reduce ongoing costs for leaseholders.
The government also plans to introduce a Social Housing Renewal Bill aimed at increasing protections for social tenants and preserving newly built affordable housing stock.
Under the proposals, newly built social homes in England will be exempt from the Right to Buy scheme for 35 years in an effort to halt the rapid loss of affordable homes. The Bill would also introduce additional protections for victims of domestic abuse living in social housing, allowing them to remain in their own homes in some circumstances.
Building safety remains another major area of focus. A separate Redress Bill will give ministers new powers to require construction product manufacturers to contribute to the cost of removing unsafe cladding from residential buildings.
The legislation is part of the Government’s wider response to the building safety crisis, with developers, builders and freeholders continuing to face pressure over improvement costs and delays in works.
The King’s Speech signals another busy legislative period for the housing sector, with agents, landlords, developers, housing associations and property professionals now awaiting further details on how the measures will be implemented in practice.
Industry response:
Timothy Douglas, Head of Policy and Campaigns at Propertymark: “Propertymark welcomes the UK Government’s continued focus on leasehold reform as we support action to address long-standing issues within the leasehold system, including excessive ground rents, unfair fees and greater transparency for consumers. We now need to see these reforms moved forward at pace with clear timelines and delivery to provide certainty and confidence for consumers and the wider housing sector.
“We acknowledge the UK Government’s ambition to make commonhold the default tenure for new flats and strengthen leaseholder rights. However, reform must be phased in carefully to avoid market disruption and ensure existing leaseholders, estate agents and developers can effectively transition to any new system. Propertymark has consistently called for clearer standards, improved transparency around service charges, professional qualifications for estate agents and practical reforms that will improve consumer confidence in the housing market. Let’s do it.
“It is positive to see plans to accelerate improvement actions and strengthen accountability for unsafe buildings. Leaseholders and residents have suffered unacceptable delays and uncertainty for too long. The UK Government must ensure that remedial funding, enforcement powers and clear legal responsibilities are quickly implemented to protect affected residents, and return confidence to the housing market.
“Reforms to the housing sector can support economic growth and allow people to move on in life, but there should also be a greater focus on reducing and removing property taxation to make it faster, easier and more affordable for people to move and get on the housing ladder, while also helping to reduce cost pressures on landlords, which in turn reduces rental costs for tenants. Propertymark is working with policy makers and “The UK will continue to engage with the government.”
Residential Freehold Association spokesperson: “The Government’s announcement in the King’s Speech that it intends to introduce legislation to reform the leasehold system and limit existing ground rents represents a wholly inappropriate interference with existing property rights which, if enacted, would seriously damage investor confidence in the UK housing market and send a dangerous and unprecedented signal to the wider institutional investment sector.
“These proposals would transfer significant value from pension funds and other long-term investors to wealthy foreign rent-buying landlords, who make up a significant proportion of leaseholders in the UK. The previous government’s own impact assessment suggested the cost of a retrospective cap could be around £30 billion, while the forced exit of professional freeholders from the sector risks disrupting construction safety projects without addressing rising service charges.
“We urge the government to prioritize reforms that will deliver meaningful real benefits for leaseholders, including regulating management agents, improving transparency and raising professional standards across the sector.”
Andrew Bulmer, Chief Executive Officer of The Property Institute: “The [Commonhold and Leasehold Reform] The Bill represents a once-in-a-generation opportunity to change the way we own and manage flats in England and Wales. Commonhold and a reformed leasehold will bring greater self-governance to flat owners, who will enjoy new rights but will also take on new legal responsibilities, including building security, company governance and financial administration.
“While we welcome the Bill in principle, we are keen to ensure that there are measures in place that move towards minimum mandatory qualifications for property managers, and while we understand that the Government will want to respond to the consultation exercise and select committee, we hope that it will announce its intentions soon, so that there is some certainty in the sector. It is important that empowered common holders and leaseholders are supported by competent, qualified professional property managers.
“Greater resident empowerment and freedom is a worthy ambition, but it should not go further than protecting owners from an unregulated sector who manage the safety of people in their homes and have millions of pounds in their biggest assets, yet have zero restrictions on entry. But, with the right safeguards in place, we know it can work. A co-owner tenure is how it operates in most other countries around the world, including Scotland. However, two-thirds of the buildings managed by our members are already resident. Are operated by homeowners through management companies, it is important that they receive professional and competent support.
“Therefore, as more homeowners collectively choose their managing agents, there must be stronger regulatory oversight to raise standards. The government must move beyond mandating qualifications and enforce regulation of property managers to secure better outcomes for residents and restore confidence in flat ownership.”
Liz Darlington, managing director of Homehold: “The Labor Government has today announced it will introduce the Commonhold and Leasehold Reform Bill. This ambitious legislation is expected to ban the sale of new leasehold flats, make commonhold the default tenure and cap ground rents for existing leaseholders.
“Once implemented, there is no doubt that these changes will benefit leaseholders. However, Labor should not be surprised if this legislative promise is not received with unconditional enthusiasm.
“For many, this Bill will feel like déjà vu. We saw a similarly sweeping piece of legislation announced by the previous Conservative government in the King’s Speech in 2023. While their Leasehold and Freehold Reform Act 2024 was finally passed during the ‘wash-up’ period at the end of the last Parliament, key provisions aimed at extending leases and making it ‘cheaper and easier’ to buy freeholds have still not been implemented.
“In a keynote address to the Institute for Government in April, Matthew Pennycook confirmed that the 2024 Act was being delayed due to a ‘small number of loopholes’ which should be rectified in this new bill. He neglected to say what exactly these were, or why they could not be resolved more immediately in other recent housing legislation, such as the Tenants’ Rights Act.
“We are now almost halfway through the current Parliament. There is no guarantee that such a sweeping and controversial bill will be passed and fully implemented before the next general election.
“Leaseholders with short leases and high ground rents are suffering; in many cases they are stuck in flats which they cannot mortgage or sell.
“Any leaseholders waiting for meaningful change may be forced to wait for this new bill to do its thing. It may happen at the end of this Parliament, but could easily go into the next Parliament. At this point we may have a very different government.
“Enacting the 2024 Act is an urgent repair of the shaky foundations of the current system. This new bill is a luxury extension distracting from the task at hand.”
Scott Goldstein, property disputes partner at Payne Hicks Beach: “The reform of the leasehold system is set to shake up the housing sector. Developers will no longer be able to occupy the freehold once construction is completed, leading to a reduction in their ground rental income, which has already been reduced with the upcoming cap in 2028.
“Further loss of earnings from lease extensions may prompt developers to recover costs by increasing the price of new-build flats. Developers may also turn their attention to projects that are not affected by leasehold restrictions, such as build-to-rent schemes or social housing.
“As the industry adopts these broader reforms, buyers may soon find themselves paying higher bills.”
Sim Sekhon, Group CEO of LegalForlandLords: “Leasehold reform may benefit home owners, but the real challenge for the government is to provide appropriate protection without undermining investment confidence or triggering wider financial consequences in the housing market.
“Any further reforms to the leasehold system are likely to be welcomed by leaseholders, but there is also a real risk of unintended financial consequences for landlords, freeholders and even pension funds investing in ground rents.
“Measures such as limiting ground rents and reducing franchise premiums can have a significant impact on long-term asset values and income streams, particularly for landlords who have investments structured around existing lease agreements. In some cases, freeholders could effectively face a double financial whammy through both lower rental income and lower franchise values.
“The key challenge for the government will be to strike an appropriate balance between improving protection for leaseholders while avoiding reforms that create market instability, discourage investment or inadvertently impact consumers through weak pension fund performance and reduced housing sector confidence.”
James Morris, Partner, Mayer Brown: “Although the focus on accelerating redress programs and manufacturers’ liability is encouraging, it is unclear how the bill will achieve those goals. In many cases the causes of distress and delays in redress are multifaceted and legislation alone is unlikely to be sufficient.
“The Government must also grapple with the practical issues that have been (at least partly) responsible for the delay in reform to this point. These include an inconsistent approach to reform, a lack of market capacity and delays caused by the building safety regulator. Without greater clarity on the specific mechanisms to be included in the Bill, it is difficult to assess how successful further legislation will be in achieving the noble objectives of increasing speed and accountability.”
Paul Ricard, Chief Executive, Pocket Living: “From a housing supply perspective, this King’s Speech contains positive measures that will help deliver new homes, such as accelerating grid connections. Recognition of the importance of housing in any successful industrial or defense strategy should also be welcomed. We look forward to continuing to work with the Government to identify and implement the bold reforms needed to unlock housing, delay affordability challenges and make progress with fiscal transfers to support local and regional housebuilding and regeneration.”