More than three million leaseholders in England and Wales are set to gain stronger rights under new government reforms to challenge unfair service charges. Freeholders will also no longer be able to automatically pass their legal bills on to leaseholders who challenge those charges.
Currently, leaseholders can find themselves paying thousands in service charges without getting a clear explanation of what the money is being spent on. Under the new rules, which come into effect in April 2027, flat owners will be able to see what they’re paying towards maintenance, repairs, insurance and general building management. Landlords must provide that information unless they have a legitimate reason to refuse.
Legal Bills Crackdown
In another major shake-up, freeholders face a crackdown on passing legal bills to flat owners. Prime Minister Andy Burnham said: “It is simply wrong that millions of leaseholders can be hit with unfair charges, then face another bill just for challenging them. That isn’t right, and where we can act quickly to change it, we will.”
“Today’s changes are only the beginning. We’re giving leaseholders stronger rights now, while we press ahead with the bigger reforms needed to put power back in homeowners’ hands and end the feudal leasehold system for good.”
Currently, some leases allow landlords to recover their legal costs from leaseholders when there's a dispute over service charges. In recent years, leaseholders have expressed concerns with issues, including rising service charges, ground rents, and overpriced estimates for repairs.
Wider Reform Plans
The reforms are part of a wider government plan to abolish new leasehold flats, with proposals to make a commonhold system – where residents collectively own and manage their buildings – the default for most new flats. Council and housing association leaseholders will receive similar protections, but they won’t come into force until November 2028.
Following consultations in 2024 and 2025, five sets of regulations are being laid in Parliament on Thursday (November 12) to bring these new leaseholder protections into force.
Under the Leasehold Reform Act 2022, the Tories brought an end to ground rents on new-build leasehold properties. After winning the 2024 election, Labour went further by capping ground rents for existing leases at £250 a year.
Minister's Response
Housing Minister Matthew Pennycook said: “Rapidly escalating and frequently opaque service charges are placing huge financial strain on hard-pressed leaseholders across the country.”
“Today, we’re acting to protect them by introducing regulations that will improve the fairness and transparency of service charges so that unreasonable increases can be more easily challenged. As we work to dismantle the feudal leasehold system in this Parliament, we won’t leave existing leaseholders behind.”
