A new lease of life: Property law reforms in 2025

2025 promises significant change to the property law landscape. Let David Peachey be your right-land man (sorry!) so that navigating these changes will be a lease of cake (Really sorry! No more terrible puns – I promise).

So what can we look forward to in 2025?

We will see how leasehold reform looks in practice.

Nothing much has happened on this, since the Leasehold and Freehold Reform Act 2024 was rushed through on the last Parliamentary day before the general election. The proposed Leasehold and Commonhold Reform Bill will address the recognised problems with the 2024 Act, and will expand the scope of reform significantly.

In the courts, we will see whether the 2024 Act is incompatible with landlords’ rights to peaceful enjoyment of property under the Human Rights Act 1998, as permission for judicial review will be considered in a cluster of cases in the week commencing 13 January 2025 (Abacus Land 1 (Holdco 1) Limited and others v Secretary of State for Housing, Communities and Local Government, AC-2024-LON-0002830 & ors).

It was also announced on 21 November that, from January 2025 (exact date TBD), leaseholders will no longer have to wait for two years after purchase before exercising the right to a new, longer lease. However, whilst the time (and possibly cost) for lease extensions will go down in 2025…

…SDLT will go up.

From 1 April 2025, buyers of second properties will pay a higher surcharge. Bad news too for first time buyers, especially in London and other locations with high-cost housing as they will be losing first-time buyer SDLT relief for properties under £625,000 and suffer from the SDLT-free threshold being reduced from £425,000 to £300,000.

I suppose it isn’t all bad news for those not on the property ladder. Flat prices may continue to stagnate because…

…the assured shorthold tenancy regime will be fundamentally changed.

The Renters’ Rights Bill has its third reading in the House of Commons on 14 January 2025, whereafter it will go to a (soon to be reformed) House of Lords. The Government plans to implement wholesale change to the residential eviction process “in one stage, giving all tenants security immediately”.

The Bill will also reduce the risk to tenants who challenge rent increases, because unlike in the current regime the tribunal will not be able to assess market rent at higher than that proposed by the landlord.

Unfortunately for tenants however, there is anecdotal evidence of increased evictions and rising rents caused by landlords offloading properties en masse, many fearing the loss of s.21 as a tool to remove difficult tenants. But as well as the headline-grabbing abolition of s.21 notices, there will be longer periods for s.8 notices and new grounds for eviction (on 4 months’ notice) where a landlord wants to sell or move into a property. Will there be scope for litigation about the genuineness of a landlord’s intention to sell/move in, as with ground (f) cases under 1954 Act? The author expects so.

And on the subject of the 1954 Act…

The Law Commission will be taking consultation responses on reforming security of tenure in business tenancies. There are broadly four models being proposed: no security of tenure, an “opt-in” model, an “opt-out” model (probably a simplified version of the current regime), and mandatory security of tenure.

An interesting element of the consultation is the scope for moving away from a “one-size-fits all” regime to differing tenure arrangements depending on business type – perhaps like a more robust version of the Pubs Code for certain sectors (e.g. retail vs. restaurants). Other factors affecting security of tenure may include the size of a unit, length of lease, location and so on.

Any reform will be hugely complicated (status under the 1954 Act affects leasehold enfranchisement, forfeiture and other areas of leasehold law) and has the potential to profoundly affect the commercial leasehold market.

Responses to the first consultation paper, which was published in November, are due by 19 February 2025.

Have my awful puns unduly influenced you to stop reading yet?

If not, you might want to keep an eye out for One Savings Bank Plc v Waller-Edwards, which is due to be heard by the Supreme Court on 27 February 2025. It has the potential to broaden the scope for avoiding charges against property in undue influence cases. Etridge etc. established two categories of joint borrowing cases. It was only where the loan is acquired to guarantee/pay the debts of just one of the joint borrowers (or a company) that the bank would be on notice of potential undue influence.

Ms Waller-Edwards, the appellant in One Savings Bank, argues that a new “hybrid” category of case should exist to put the bank on notice of undue influence. This would apply where only part of the loan is used to pay the debts of one of the joint borrowers. She lost in the Court of Appeal, to the relief of lenders. So watch this space and, in the meantime, all the best for 2025!

Article by David Peachey