UK land and property: what’s happening with freehold and leasehold reform?

In July 2025, Britain’s High Court heard a judicial review challenging the Leasehold and Freehold Reform Act 2024. The legislation is the latest step in an effort by the UK parliament to curb landowners’ ability to extract large sums of cash from those occupying and using their land. This is a battle that stretches back at least to the 1880s.

The aim of the 2024 act is to phase out the role played by landowners in people’s dwellings. It does so by making it possible for flat occupiers – known as leaseholders – to be able to buy the buildings in which their flats are housed, removing them from landowners’ control and tilting the balance of power in the legal system back towards occupiers who actually pay the costs of upkeep and maintenance.

For decades, landowners have fought to keep the legal structure governing ownership and occupancy of multi-tenanted residential blocks currently in place. But growing awareness of the legal jeopardy of being a leaseholder – plus the economic constraints of land law – have prompted demands for reform.

The legal structure of land ownership also has significant implications for property prices and infrastructure development in Britain. At a time when the country has been in a long period of economic stagnation, further reform could ease one of the most substantial constraints on growth.

What is the status of leasehold in Britain?

The legal challenge – and the legislation that prompted it – reflects the unique status of land ownership in England and Wales. No other country retains the structure that exists today.

The origins of land law in Britain date back to feudal and medieval times when national governance was in the hands of large landowners. Electoral reforms in 1832 and 1867 expanded voting rights to some of those who did not own land. But even after universal suffrage in 1928, land law remained heavily tilted in favour of those who owned it.

In contrast, dwellers in urban flats in Australia, France and the United States own both the premises in which they live and a share of the building in which their flats are housed. This legal structure is known as a ‘condominium’, ‘cooperative’ or ‘strata title’. But unlike their counterparts elsewhere in the world, leasehold flat occupiers in multi-tenanted buildings in England and Wales do not actually ‘own’ their property, although many mistakenly believe that they do.

What leaseholders own is essentially a time-limited right to occupy the properties, a privilege for which they may have paid as much as they might have for a house, but which is subject to terms and conditions, maintenance fees and service charges set by the landowners or their appointed representatives. Leaseholders are ‘owners yet tenants’ (Cole and Robinson, 2010).

That occupancy right expires at the end of the lease term and the flat returns to the ownership of the freeholder/landowner with no compensation paid to the leaseholder. As the expiry date draws near, the value of each lease falls towards zero, thereby becoming a ‘wasting asset’. While the lease can be sold on, its value is related to the conduct of the freeholder/landowner, who can delay critical repairs or whose service charges and other fees can undermine the value of the leaseholder’s investment.

The reason for this odd legal structure is that in England and Wales, land law does not permit those structures to be classified as ‘property’. There is no absolute right of property ownership that is independent of ownership of the ground on which the property stands (Hamnett and Randolph, 1988).

Instead, English property law distinguishes between owners of freehold title, which confers ownership only on those who actually hold land title. Those who use, or occupy, flats or houses built on that land are merely buying a time-limited right, known as a leasehold. This grants occupancy rights for a number of years; leases of 99 to 125 years are common. Leaseholders are required to pay service charges, presumably for upkeep and maintenance of the parts of the building used by residents, such as stairwells, gardens and lifts.

What are the costs for leaseholders?

A key source of tension is that although it is leaseholders who pay the costs of building maintenance, it is freeholders/landowners who have the right to control that upkeep while avoiding any risk of cost-bearing themselves. Freeholders typically appoint a managing agent – sometimes a related entity – to be responsible for overseeing maintenance work.

This agent contracts with providers of goods and services and the costs are passed on to leaseholders as service charges, usually paid quarterly or six-monthly. But there is no requirement that these agents seek value for money when choosing contractors. The sole requirement is that the charges are ‘reasonable’, which is an easily contestable term that does not mean the best obtainable price. Nor is there a requirement that building repairs be undertaken quickly.

One element of the 2024 legislation makes it easier for leaseholders, not freeholders, to choose their own managing agent and allows them to sack those who do not act in the occupiers’ best interests. This would give leaseholders more control over costs without the need to buy the freehold.

Another issue is the fact that many leases include a requirement for annual payment of ‘ground rent’. The origins of this fee, for which no service is provided, date back to feudal times when serfs rented land to be used to produce agricultural goods to be sold in markets.

In recently built residential towers, there are reports of ground rents doubling every 10 or 15 years. The increases can be so substantial that mortgage lenders will not approve loans where such rents exist, fearing that occupancy costs will outstrip buyers’ ability to repay. The problem has become so great that parliament restricted ground rents on most new leases to zero financial value, known as ‘peppercorn’, with legislation in 2022.

Indeed, recent revelations of soaring demands for payment of service charges and ground rents have highlighted the legal risks facing leaseholders. These, in turn, have begun to affect demand for, and prices of, leasehold flats.

In the three years to 2024, flat sales are down by 25-33% on volumes that would have been expected if owners could have sold at prices above those that they paid, according to analysis by estate agents Hamptons. Zoopla, the property market search engine, found that by early 2025, flat prices had been rising so slowly that the gap between them and prices for houses was at its widest level in 30 years.

Freeholders are effectively causing the value of leaseholder property to flatten or fall, precisely the argument that freeholders are making in respect of government legislation curbing some of their powers.

It is not as though the punitive legal structure of leaseholders has escaped government attention. Over decades, successive governments have sought legislation to mitigate the ability of freeholders to take unfair advantage of occupiers. But even when legislation has been enacted, these efforts have proved difficult to enforce.

In a 2019 report, the House of Commons Housing, Communities and Local Government Select Committee concluded that ‘Often, leaseholders – particularly in new-build properties – have been treated by developers, freeholders and managing agents, not as homeowners or customers, but as a source of steady profit. The balance of power in existing leases, legislation and public policy is too heavily weighted against leaseholders, and this must change.’

That report also recommended a ban on the use of the word ‘sale’ for marketing homes held on a leasehold title. Instead, it argues that the property interest should be labelled ‘lease-rental’, including for government publications and policy statements.

A further quirk in English law explains why long leases for housing came to exist. That is the peculiarity that makes it impossible to enforce ‘positive obligations’, such as the responsibility for the maintenance and servicing of common parts of a residential block of flats, on successive purchasers. Any agreement between initial purchasers of flats in a block to share the costs of maintenance and servicing therefore becomes ineffective once the flats are resold.

To get around this quirk, in 2002, parliament introduced a new legal structure for multi-tenanted residential buildings known as ‘commonhold’. This law, widely ignored by property developers and landowners, creates a structure like that of a condominium, cooperative or strata title seen in every other country.

A Law Commission report in 2020 explains the reason for that paucity of development: broadly, landowners can derive far higher cash and profits from leaseholds than from commonholds. The report concludes:

‘Developers and other property-owners are currently incentivised to sell flats on a leasehold basis… The freehold is a valuable asset for the developer because it provides a steady income from ground rents, income from lease extension premiums, and other income from the leaseholders. Developers can therefore sell the flats that they build twice: they sell a long lease to the homeowner, and they can sell the freehold to an investor. By contrast, commonhold flats can only be sold once – to the homeowner’, the report concludes.

Developers therefore have no incentive to adopt commonhold, the Law Commission concludes. This may explain why freeholders are fighting to retain the legal structure in place now.

The ability of freeholders to demand – and receive – substantial cash payments from leasehold occupiers is hardly new. Indeed, studies published in peer-reviewed scholarly publications cover decades of reported abuses. The research paper that refers to leaseholders as ‘owners yet tenants’ notes that efforts at legal reforms date back to the 19^th century, a practice that gathered steam in the 1980s and 1990s as the financial advantages of converting rental apartment blocks into leasehold flats picked up pace amid rising complaints of abuse of occupiers (Cole and Robinson, 2010).

How did we get here?

The construction of residential tower blocks began in the late 19^th century, mostly in London, and they were typically purchased by investors who would receive rental income (Hamnett and Randolph, 1988). In Britain, 90% of housing stock was occupied by renters in 1915, when the outbreak of the First World War prompted rent controls to combat inflation. These controls continued in various forms until 1989.

In addition, favourable tax treatments for homebuyers made ownership much more attractive than renting. By the 1970s, it was becoming clear to owners of residential tower blocks, particularly in London, that the ability to persuade a sitting tenant to move out produced an immediate uplift in the value of the property.

Thus began the shift from renting flats to selling them to would-be occupiers on long leases. With home ownership a far more attractive proposition than rental occupancy, the development of residential towers took off. In 2023-24, 19% of households in England alone were leasehold, of which roughly three-quarters were flats. By 1990, only 10% of housing stock was in rented form.

A harsh spotlight was cast on residential leasehold towers by the tragic Grenfell Tower fire in 2017 where 72 people died. Although that tower was social housing, it quickly emerged that the faulty cladding in that building had been used in dozens of privately owned towers currently occupied by leaseholders who had paid handsomely for their premises. The ensuing battle concerned the ability of freeholders to pass on the costs of repairs to leaseholders who, legally, do not own a single brick of the building and are mere tenants.

Another recent point of contention has been insurance for residential towers. It has become clear, especially since a Financial Conduct Authority review in 2022-23, that freeholders and managing agents were receiving substantial, but often hidden, commission payments from the insurance brokers from whom they bought policies. The costs of these were passed on to leaseholders. Leaseholders have long suspected that managing agents sought commission payments from providers of other upkeep and maintenance services, but because they are not party to the negotiations, they have no firm way of knowing.

What is the current legal redress for overcharged leaseholders?

Leaseholders wishing to challenge annual service charges can turn to a complex legal avenue for relief. The first-tier property tribunal will hear their cases, but this requires not only the time and effort to research cases but also the funds to retain legal advice. Due to lease terms, freeholders, defending against these challenges, have been able to add their own legal costs of defence to the annual service charge paid by leaseholders, whether they win or lose. This presumption in favour of landlords is set to end under the 2024 legislation currently being challenged by freeholders.

The ability of freeholders to demand cash from occupiers has long been well known and well documented. The earliest effort at legislative reform came in the Leasehold Reform Act 1967 giving occupiers of houses – but not of flats – the right to a compulsory buy-out of the ownership of the freehold.

Reports of abuses of leaseholders continued to rise with increasing conversions from rental to leasehold residential blocks during the following years. In 1993, new legislation giving groups of leaseholders in flats a no-fault right to buy the freehold, known as ‘collective enfranchisement’, was passed, but after successful lobbying by landlord interests, it contained so many loopholes as to be broadly ineffective.

A 2001 article in the Journal of Law and Society lists 12 separate proposals and initiatives between 1984 and 2000 aimed at addressing leaseholders’ grievances. The study also cites research from the Department of the Environment, Transport and the Regions (DETR) into why leaseholders seek relief: of 875 leaseholders who sought advice over a nine-month period in 1994, 85% said they wanted more control over the management of their property, 60% expressed concern about future service charges and 53% expressed concern about current service charges.

The article notes that: ‘In these responses, leaseholders revealed a catalogue of, often severe, problems. Concern about escalating or unreasonably high service charges included suspicions about the inflation of charges to obtain excess profit, and charges for non-existent utilities and services, while the maintenance of the structure of buildings was commonly reported to be deteriorating.’ (Blandy and Robinson, 2001).

Although current land law is described as ‘feudal’, that definition is limited. The origins in the 10^th to 12^th centuries were used for two purposes. First, it is a system of land tenure.

Second, it became a form of government, notes William Holdsworth in his 1927 book Historical Introduction to the Land Law. Land is held by the tenants of a lord; the relationship of lord and tenant gave the lord a certain jurisdiction over the tenant and imposed on tenants, in turn, the duty to attend the lord’s court. In this way, the powers of government were split among holders of land. But the system has proved remarkably enduring, despite repeated efforts at legislative and regulatory reform.

How does land law affect the economy?

While the legal structure for land may have been efficient in medieval times when England was largely rural and agrarian, it has become a significant obstacle, particularly in an economy that has steadily grown more urban and oriented to the services sector, largely abandoning the rural agricultural economy prevailing at the time the laws were set.

The legal structure for land ownership raises important questions for economists. For example, does the ability to extract so much cash from occupiers of land drive up the price that investors are prepared to pay for it? How do land costs per hectare compare with those elsewhere in Europe?

If land costs are higher, the implications go well beyond house prices. Do relatively high prices for land affect infrastructure development? Do they deter foreign direct investment (FDI) into Britain? Does this extractive ownership structure act to discourage development of high-density urban areas, which drives productivity on the continent?

These are not idle questions given the agreed need for infrastructure development and the lagging rate of FDI. Could tackling land law help to make England a more competitive economy? There may be some very strong economic reasons for reform.

Where can I find out more?

Media reports

• How England’s flats turned into second-class housing: Financial Times article by John Burn-Murdoch, 19 May 2023.
• A two-tier housing market will be the result of Labour’s half-baked leasehold reform plans: Guardian article by Harry Scoffin, 13 March 2025.
• ‘It’s just outrageous’: UK leaseholders face down landlords over insurance costs: Financial Times article by Ian Smith and Kate Beioley, 17 February 2023.
• Freeholders begin high court challenge over reforms: BBC News piece by Tarah Welsh, 15 July 2025.
• Who are the ‘shadowy’ lobbyists trying to save leasehold? Times article by Melissa York, 1 March 2024.
• Leasehold reform delays leave homeowners in financial limbo: Times article by Melissa York, 7 July 2025.

Official documents

• Committee of Inquiry on the Management of Privately Owned Blocks of Flats: The Nugee Report, published by HMSO in 1985, is available in print only, copies can be requested here.
• Leasehold housing: Update report: 2020 publication from the Competition and Markets Authority.
• FCA sets out multi-occupancy leasehold insurance reforms: April 2023 announcement by the Financial Conduct Authority.
• Leasehold reform in England and Wales: What’s happening and when? House of Commons Library, 9 July 2025.
• Leasehold home ownership: buying your freehold or extending your lease: Law Commission report in 2020.
• Tackling unfair practices in the leasehold market: Summary of consultation responses and government response: Department for Communities and Local Government report in 2017.
• Government response to the Housing, Communities and Local Government Select Committee report on Leasehold Reform: Ministry of Housing, Communities and Local Government in 2019.
• Commonhold White Paper: The proposed new commonhold model for homeownership in England and Wales: Ministry of Housing, Communities and Local Government in March 2025.

Research publications

• The politics of urban leaseholds in late Victorian England: 1961 paper by DA Reeder, published in the International Review of Social History.
• Cities, Housing and Profits: Flat Break-Up and the Decline of Private Renting: 1988 book by Chris Hamnett and Bill Randolph, published by Hutchinson.
• The onward march of leasehold enfranchisement: 1994 paper by Martin Davey, published in the Modern Law Review. 
• Commonhold: a prospect of promise: 1995 paper by DN Clarke, published in the Modern Law Review.
• Reforming leasehold: discursive events and outcomes, 1984-2000: 2001 paper by Sarah Blandy and David Robinson, published in the Journal of Law and Society.
• Can a consumerist model of law reform solve the problems of leasehold tenure? Chapter by Helen Carr, Caroline Hunter, Carl Makin and Gwilym Owen, published in Modern Studies in Property Law edited by Natalie Mrockova, Aruna Nair and Luke Rostill, Hart Publishing Limited, 2023.
• Service charge budget: to consult or not to consult? 2025 paper by Haward Soper, published in Amicus Curiae: Journal of the Society for Advanced Legal Studies.
• Residential vertical urbanisation: the intertwining of law and financialisation: 2025 paper by Susan Bright, Sarah Blandy and Fabiana Bettini, published in Urban Studies.

Who are experts on this question?

• LEASE, the government-funded Leasehold Advisory Service.
• Harry Scoffin, housing campaigner and founder of Free Leaseholders.
• Norma Cohen, honorary research fellow, Queen Mary University of London.
• Shula Rich, vice chair, Federation of Private Residents’ Association; and chair, Brighton Hove and District Leaseholders Association.
• Bob Smytherman, chairman, Federation of Private Residents’ Association.
• Ricky Coleman, founder and specialist leasehold solicitor, Peppercorn Law.
• Mari Knowles, managing director and landlord and tenant lawyer, Commonhold and Leasehold Experts Limited; and works part-time for the Ministry of Housing, Communities and Local Government advising on all aspects of commonhold and leasehold reform, having joined the Ministry following a year working at the Law Commission on the Right to Manage project.
• Matt Lewis, consultant solicitor, Commonhold and Leasehold Experts.
• Haward Soper, honorary associate professor of law, University of Leicester
• Nicholas Roberts, legal adviser, Federation of Private Residents’ Association; and former team lawyer at the Law Commission, working in the property, family and trust law team on residential leasehold, principally on the reinvigoration of commonhold.
• Nick Hopkins, outgoing Law Commissioner for Property, Family and Trust Law; and incoming Professor of Land Law, University College London.
• Lu Xu, senior lecturer, Lancaster University.
• Susan Bright, professor of land law, Oxford University.
• Martin Dixon, professor of the law of real property, University of Cambridge.
• David Clarke, emeritus professor of law, University of Bristol.
• Chris Hamnett, emeritus professor, King’s College London.

Author: Norma Cohen