Legislation Updates for the UK Property Management Industry
As a leading UK property management company, POD Management is committed to keeping our clients and customers informed about the ever-evolving legislative landscape. Recent developments in property legislation hold significant implications for leaseholders, freeholders, developers, and property managers alike.
As we enter a new year, the POD team take a closer look into some of the recent important legislation updates for our sector that have come into play over the last few months and could further develop throughout 2025.
Leasehold and Freehold Reform Act
The Leasehold and Freehold Reform Act that is due to come into effect, represents a landmark shift aimed at empowering leaseholders and addressing long-standing disparities in the property market. There have been recent changes to the act that will also allow leaseholders to buy their freehold or extend their lease immediately, instead of having to wait two years, it also improves Right to Manage (RTM) provisions and creates more transparency over service charge costs.
The changes are not expected to come into effect until 2025/2026 as they require secondary legislation to be drafted. However, key provisions of this act include:
Abolition of Ground Rent for New Leases: Ground rent for most new residential long leases in England and Wales has now been significantly reduced. This change eliminates an often-controversial financial burden for leaseholders and is designed to create a fairer system for those purchasing leasehold properties.
Simplified Lease Extensions: The Act paves the way for leaseholders of houses and flats to extend their leases by up to 990 years at zero ground rent. This reform will provide long-term security and remove uncertainties around the financial implications of lease renewals.
Future Reform Goals: Although the current act has made significant strides, it is part of a broader legislative agenda that aims to improve leasehold arrangements further. Future developments may include simplifying the enfranchisement process and addressing high service charges.
For UK property management companies, these changes necessitate proactive engagement with leaseholders to ensure compliance and transparency. Managing the transition to ‘zero financial value’ ground rents and assisting leaseholders with lease extension processes will be critical. Additionally, communicating the implications of these reforms to stakeholders is essential for maintaining trust and effective relationships.
Leasehold and Commonhold Reform Act
The Leasehold and Commonhold Reform Act introduces measures to promote the adoption of commonhold ownership as an alternative to traditional leasehold arrangements. While commonhold has been available since 2002, uptake has been limited due to its perceived complexity and lack of awareness. A new draft is due in 2025 and is likely to include a new framework around commonhold, tackle unregulated ground rents, end forfeiture, remove insurance commission and protect leaseholders by regulating managing agents, including mandatory professional qualifications.
Key features of the reform:
Encouraging commonhold ownership: The government aims to make commonhold a more attractive option by streamlining the conversion process and improving the framework for commonhold management. This is particularly relevant for new-build developments, where commonhold could become a preferred choice.
Improved protections for leaseholders: Enhancements to existing leasehold arrangements, including measures to prevent unfair practices such as escalating ground rents, are integral to the reform agenda.
Supporting communities: Commonhold ownership allows residents to collectively own and manage shared spaces without the hierarchical structure of leasehold arrangements. This fosters a greater sense of community and control over property management decisions.
The shift towards commonhold may require property managers to adapt to new management structures. While commonhold offers benefits, such as eliminating ground rents and reducing leaseholder disputes, it also necessitates robust governance and effective collaboration among property owners. Property managers must be prepared to guide stakeholders through the transition and provide tailored management solutions that align with commonhold principles.
Review of the New Homes Quality Code
The New Homes Quality Code (NHQC) is a significant initiative that was introduced in 2022 aimed at enhancing the quality of new-build homes and protecting buyers. Following its first comprehensive review in 2024, several updates have been proposed to ensure higher standards and greater accountability in the housing market. This includes protected payments, pre-completion inspections, home completion requirements and a builders after care service.
Highlights of the NHQC review include:
Stricter standards for developers: The revised code introduces stringent requirements for developers, covering aspects such as construction quality, aftercare services, and transparency during the sales process. Developers must now adhere to these standards to ensure their homes meet buyer expectations.
Enhanced consumer protections: Buyers of new-build homes are entitled to a clear complaints process and robust redress mechanisms. The NHQC also outlines a mandatory 2-year builder warranty for newly constructed homes.
Independent oversight: The New Homes Quality Board (NHQB) oversees compliance with the NHQC. Developers must register with the NHQB and demonstrate adherence to the code to maintain their eligibility to sell homes.
UK property management companies play a vital role in bridging the gap between developers and homeowners. With the updated NHQC, property managers must ensure that developers meet their obligations and that homeowners are aware of their rights. This involves clear communication, efficient complaints handling, and a commitment to maintaining high standards in managed properties.
At POD Management
At POD, our team is dedicated to staying ahead of the curve and ensuring that our services align with the latest legal requirements. We are already leading the way by not just meeting but exceeding the changes being proposed by legislation, providing greater clarity over service charges, never taking insurance commission and ensuring all staff meet industry qualification standards, to name a few.
Alongside the above, here are a few other ways we are addressing the recent updates:
Education and training: We provide ongoing training for our staff to ensure they understand the nuances of any new legislation and can offer expert guidance to clients.
Stakeholder engagement: We proactively engage with leaseholders, freeholders, and developers to communicate the implications of these reforms and assist in implementing best practices.
Adaptable management strategies: Our approach to property management is tailored to meet the unique needs of each property, whatever the task at hand may be. We are open, honest and meticulous in our approach to ensure the best service possible.
Want to Know More?
The recent legislative updates represent a pivotal moment for the property management industry. By addressing inequalities in leasehold arrangements, promoting commonhold ownership, and enhancing the quality of new-build homes, these reforms aim to create a fairer and more transparent property market.
At POD Management, our UK property management is committed to navigating these changes with professionalism and expertise. By staying informed and adapting to new regulations, we continue to provide exceptional service to our clients while contributing to the evolution of the property management industry. Want to read more on this? Take a look at our recent LinkedIn Post.
If you are looking to appoint a new property management company to assist in the smooth running of your property in 2025, the POD team can help you today:
Fill out our business enquiry form
Email us at relationships@podmanagement.co.uk
Call us on 0333 577 6656
We look forward to hearing from you!