Strengthening Leaseholder Protections over Charges and Services – Consultation Summary
The Government has published an open consultation titled “Strengthening Leaseholder Protections over Charges and Services,” which runs until 26 September 2025. This consultation accompanies the implementation of the Leasehold and Freehold Reform Act 2024 and is part of the wider legislative programme designed to rebalance the leasehold system in favour of flat owners and occupiers.
The consultation targets the next phase of reforms: improving transparency around service charges, regulating managing agents, and reforming major works and reserve funds.
While all of these reforms seem to favour leaseholders, ultimately life may become more expensive, and some flats may be more difficult to sell as a result.
Transparency Over Fees and Charges
The first suite of proposals is aimed at empowering leaseholders to understand and challenge service charges more effectively.
Key measures include:
- A new annual report summarising the building's condition, planned major works, key contacts (including fire safety and managing agents), and statutory proceedings.
- A standardised “service charge demand form”, with clear breakdowns of expected annual expenditure and payment terms.
- A new “future demand notice” to provide early warning of costs that may be recovered through the service charge, clarifying the 18-month notification rule.
- A duty to publish an “administration charge schedule”, detailing applicable one-off charges for specific requests and calculation methods .
- Proactive provision of insurance information, including full disclosure of commissions received by landlords from insurance brokers and potential conflicts of interest.
- Standardised service charge accounts issued within six months of the year-end for blocks of four or more units.
- Extended rights to request supporting documentation concerning service charges, management, insurance and maintenance, beyond current statutory rights.
- The rebalancing of litigation costs: reversing the burden so that landlords must now apply for permission to recover legal costs from leaseholders through the service charge, whilst also introducing a new right for leaseholders to recover costs in successful claims.
Reforming Major Works and Reserve Funds
The consultation looks at ways of spreading major works expenditure over time to avoid large and potentially unexpected service charge bills for major works.
Proposals include:
- Mandatory reserve funds for likely future works (such as roof replacement) supported by asset management plans, aimed at smoothing contributions over time and reducing one-off shocks.
- Reform of the Section 20 consultation process, including higher monetary thresholds in line with inflation to avoid delay in urgent or minor works, and better clarity for leaseholders through standardised notices.
- Additional protections for leaseholders’ funds, including possible reforms to trust arrangements and enhanced digital access to account information.
Equalising Rights for Fixed Service Charges
Currently, leaseholders paying fixed service charges have fewer protections than those paying variable charges. The Government is consulting on whether such leaseholders should also be given rights to challenge reasonableness and benefit fully from the new transparency regime.
Regulation of Managing Agents
The Government proposes:
- A requirement for professional qualifications for all managing agents operating in England, likely set at Level 4 (first-year undergraduate level).
- Agent firms must ensure employees are qualified, with a designated professional body proposed to oversee compliance.
- Enforcement powers may be granted to local authorities or redress schemes.
- Proposals include transitional arrangements and grandparenting rights for those already qualified.
Enhancing Leaseholder Control and Digital Modernisation
Other measures under consideration include:
- Reform of the Section 24 tribunal process, making it easier for leaseholders to replace failing managing agents.
- Potential rights for leaseholders to veto or replace underperforming agents.
- Greater use of digital platforms and communication tools to reduce costs and improve access to information.
No Proposals on Lease Extension or Freehold Enfranchisement — Yet
It is important to note that this consultation does not relate to the implementation of the Leasehold and Freehold Reform Act 2024 in respect of lease extension or freehold enfranchisement.
The Government has indicated that a further consultation will follow, focusing specifically on the implementation of those parts of the Act and the supporting valuation methodology, including any prescribed deferment or capitalisation rates. We anticipate that consultation to be issued later in 2025.
Conclusion
Once these changes become law, leaseholders may find life more expensive and the value of some flats may suffer comparatively as for example:
Transparency requires more management input, which leaseholders will ultimately bear the cost
More qualified managing agents and support teams will be more expensive, therefore management fees may increase.
Asset management plans and professionalising planning for major works may mean more costs need to be budgeted for, increasing reserve fund demands.
Reserve funds will increase the annual contributions that must be disclosed on sale: this may adversely affect the value of flats in high maintenance buildings, making them more difficult to sell.
Future flat owners will welcome the greater long-term transparency of reserve funds derived from an asset management plan, and flat values will ultimately reflect their choices.
Current leaseholders such as those who have control of the management of their block (whether via the right to manage or freehold enfranchisement), who have preferred to keep annual costs low and major works funds in their pockets until required, may come to rue the changes. Some who are asset rich, but income poor may have a real problem.
Leaseholders, landlords, managing agents and professionals are encouraged to engage with the consultation, which runs until 26 September 2025. The resulting secondary legislation will shape the practical implementation of the Leasehold and Freehold Reform Act 2024 and pave the way for further reform through the anticipated Leasehold and Commonhold Reform Bill.
We continue to advise landlord and leaseholder clients on the implications of this evolving regime.
Mark Vinall, Solicitor and Partner, Ashley Wilson Solicitors LLP
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