Leasehold Reforms: New Rules to Limit and Clarify Service Charges for Leaseholders
The UK is introducing new rules to limit and clarify service charges for leaseholders. Learn how these changes improve transparency, protect your rights, and help you make informed property decisions
Leasehold Reforms: New Rules to Limit and Clarify Service Charges for Leaseholders
What’s Changing?
Alongside the Renters’ Rights Bill, the UK government is rolling out major reforms to the leasehold system in 2025–2026—targeting unfair service charges, lack of transparency, and disempowered leaseholders in blocks of flats and developments.
These changes aim to:
Provide clear breakdowns of service charges
Prevent landlords and managing agents from inflating costs
Give leaseholders new rights to challenge charges and demand justification
Strengthen legal enforcement against overcharging and poor management
While these reforms apply primarily to leaseholders rather than private tenants, they affect millions of people living in leasehold flats across England and Wales—many of whom are also landlords, buy-to-let investors, or shared owners.
What Is a Leasehold?
In a leasehold arrangement, you own the right to live in a property (usually a flat) for a fixed term but do not own the land or structure. That remains with the freeholder, who typically appoints a managing agent to oversee building maintenance, insurance, and shared spaces.
You pay regular service charges, ground rent, and management fees, which can sometimes be:
Poorly itemised
Arbitrary or inflated
Challenging to dispute
Subject to little or no accountability
The government is addressing these problems head-on.
Key Leasehold Reforms (2025–2026)
Transparent service charge statements
Landlords and managing agents will be required to provide clear, itemised bills
Charges must show exact costs, dates, and descriptions of services performed
No more vague references like “administration fees” or “miscellaneous maintenance”
Right to challenge unreasonable charges
Leaseholders will have an explicit legal right to contest charges they believe are unjustified
Disputes can be taken to the First-tier Tribunal, with strengthened powers to order refunds or cancel charges
Ban on opaque commissions and kickbacks
Managing agents must disclose any commissions received (e.g., from contractors or insurance firms)
Hidden markups or conflicts of interest will be prohibited
Simplified legal process
Leaseholders will gain the right to request key documents from managing agents—within a fixed timeframe
Failure to respond could result in penalties or enforcement orders
Ground rent cap (from previous reforms)
Although separate from service charges, the ban on ground rent for new leases (from 2022) complements this reform package by reducing future leasehold costs
What This Means for Leaseholders
For leaseholders, this is a long-awaited victory. You’ll benefit from:
Greater control over what you’re being charged
Legal tools to dispute unreasonable fees
A more transparent relationship with building managers
More leverage when selling or remortgaging your home
The days of being billed thousands of pounds with no supporting paperwork—or being ignored when you ask questions—are coming to an end.
What This Means for Landlords (Leaseholder-Investors)
If you own a buy-to-let flat on a leasehold basis, these changes affect you too. You’ll be able to:
Better predict service charges
Hold managing agents accountable for property standards
Avoid disputes with tenants caused by unclear maintenance charges
This is especially helpful for landlords managing thin profit margins, where rising and unexplained service fees can undermine rental viability.
Enforcement and Oversight
The reforms will be supported by:
Clearer tribunal procedures
New rights under the Leasehold and Freehold Reform Bill
Pressure on managing agents to meet professional standards
Additional powers for the Building Safety Regulator and Local Authority Housing Teams will ensure ongoing compliance
Final Thoughts
These leasehold reforms are designed to bring fairness, clarity, and accountability to a system that’s long been viewed as opaque and one-sided. Whether you’re a first-time buyer, a long-time leaseholder, or a landlord with a flat portfolio, these changes will empower you to make better financial decisions and defend your rights.
For too long, leaseholders have been the silent stakeholders in property ownership. In 2025–26, that will finally begin to change.
About LuArl Nest Estate Agents
At LuArl Nest, we believe in clear, honest service for both tenants and landlords.
Whether you’re looking to rent your next home or find the perfect tenant, our team is here to guide you every step of the way.
📧 Contact us today at info@luarnest.co.uk or visit www.luarnest.co.uk to find out how we can help you!