The law of property 2025

This time last year I wrote of ‘A New Year’s reformation‘. With building safety, planning, leasehold and corporate reform jostling for centre stage it seemed that there was little that was not being “reformed” all making for a busy year for the real estate sector.

Whilst the fast-changing legal landscape of 2024 did keep everyone on their toes and in that sense the prophecy was fulfilled, with hindsight it would be a stretch to describe 2024 as “the year of reformation”.

So, in the centenary year of the Law of Property Act 1925, what of 2025? Can the government find touch with some of the items on its legislative agenda or will it be a case of kicking the can down the road (if so, hopefully not for another 100 years!)?

Building safety

With April 2024 marking the end of the transitional period, the industry has continued to adapt to the new building safety regime introduced by the Building Safety Act 2022 (BSA). Sitting alongside the piecemeal implementation of the regulations, we have seen an ever increasing flow of BSA cases making their way through the courts and the BSA is going to keep the Court of Appeal busy in 2025 as well. Triathlon Homes LLP v Stratford Village Development Partnership and others and Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point are due to be heard sequentially in mid-March. In both these cases the provisions of the BSA were held to have retrospective effect which means that by the end of the year we should have some clearer authority on the retrospectivity of the BSA.

Despite the flurry of activity, the government remains concerned that there are “far too many residential buildings today still with unsafe cladding and the speed with which this is being addressed is far too slow”.  The government announcing its Remediation Acceleration Plan (RAP) was not therefore a left field entry for December. Based on the three core objectives:

• fixing buildings faster;
• identifying all buildings with unsafe cladding; and
• supporting residents through the remediation process,

the RAP is intended to accelerate the current rate of remediation in buildings plagued by safety risks.

Of particular note is the government’s proposal to legislate to bring “relevant buildings” (11m+ in height or at least 5 storeys and containing at least 2 dwellings) within the scope of registration with the Building Safety Regulator with the “strongest possible penalties for those that do not comply”.  What is not clear is whether the purpose of this is simply to close the information gap and ensure that there is a complete register to make the task of identifying, assessing and fixing buildings that require remediation faster and more straightforward or whether the intention will in fact be to bring Relevant Buildings within the scope of the enhanced building safety management regime which currently only applies to Higher-Risk Buildings (HRBs) (18m+ in height or at least 7 storeys containing at least 2 residential units).

Something else to look out for this year is the introduction of the Building Safety Levy expected to come into effect in the Autumn of 2025. This will be charged on all new residential buildings in England (subject to exemptions of which no further detail has been provided to date) which require building control approval.

Rome was not remediated (please excuse the artistic licence) in a day, so whilst 2025 is likely to see a lot of activity, the Government’s aim is that by the end of 2029 all HRBs with unsafe cladding in a Government funded scheme will have been remediated and by the end of 2029, every relevant building with unsafe cladding will either have been remediated, have a date for completion, or the landlords will be liable for severe penalties. A tick in the reform box.

Unsurprisingly, the Building Safety Act 2022 was once again front and centre in 2024 and will remain so in 2025 but what of the other legislative contenders jostling for the legal limelight?

☑ Reform(ongoing)

Renters’ rights

The Renters’ Rights Bill, first introduced on 11 September 2024, is storming parliament and, having cleared the House of Commons on 14 January 2025, is expected to have its first reading in the House of Lords in late January or early February. This is therefore a piece of legislation that will hit the statute books in 2025 (in all likelihood in late Spring). The Bill aims to reform the residential rental market by replacing fixed term assured tenancies and assured shorthold tenancies with periodic assured tenancies. Although much of it is not expected to be effective immediately, the government’s intention, as stated by Angela Rayner in the second reading debate, is to “abolish no fault evictions for new and existing tenancies at the same time to give all tenants the same security immediately”. This is clearly another tick in the “reform” box.

☑ Reform (ongoing)

Leasehold reform

Where to start? The answer, given this is a blog not a tome, is most certainly not at the very beginning!

The Leasehold and Freehold Reform Act 2024 (LAFRA) received Royal Assent on 24 May 2024 having been fast-tracked as part of the pre-election “wash up”. LAFRA followed on from the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for most new residential leasehold properties and when fully implemented will substantially amend the law relating to leasehold enfranchisement and lease extensions of both houses and flats.

The new government was expected to implement LAFRA swiftly. However, with the exception of a handful of provisions relating to rentcharges and BSA related changes to remedial orders, the remainder of LAFRA has not been implemented and the industry remains in a state of relative limbo. Is 2025 actually going be the year for leasehold reform?

The short answer is no. The government recognises that there is a need to balance speed with care to ensure that the measures brought into force are “to the lasting benefit of leaseholders and residential freeholders”. More pertinently, the government have identified “a small number of specific but serious flaws which would prevent certain provisions from operating as intended and that need to be rectified via primary legislation” and so significant reform is not imminent.  That said, it is expected that:

• the rule that requires leaseholders to wait for 2 years after they purchase a property before they can extend their lease or buy the freehold will be removed in January 2025; and
• the right to manage provisions (expanding access and reforming its costs and voting rights) will be brought into force as a coherent package in spring 2025 which will enable more leaseholders in mixed-use buildings to take over management from their freeholders.

Everything else will be subject to further consultation including provisions on service charges and on legal costs and on the valuation rates used to calculate the cost of enfranchisement premiums.

Commonhold

While the government has acknowledged the need to fix the LAFRA and implement its provisions as soon as possible, they have always been clear that LAFRA does not go far enough. In that vein, they have committed to publish a “landmark Leasehold and Commonhold Reform Bill” in the second half of 2025 with a White Paper on commonhold reforms published as a precursor. With the resurrection of commonhold as its crown jewel, this is the type of reform that leaseholders may well be looking for although the shift to commonhold would not only be hugely complex in terms of the legislative framework but would also have wide reaching and significant commercial implications for the residential market.

The bottom line is that the task of reforming leasehold is extremely complex and as a result the timeline for doing so remains uncertain. Leasehold reform is slippery customer and is therefore a can that has and will continue to be kicked down the legislative road.

☑ Reform (ongoing)

1954 Act business tenancies

Whilst consultations are high on the agenda for the residential sector, the commercial sector will have its fair share too in 2025. As we mentioned in ‘Security of tenure – hold or fold?‘,  the Law Commission’s wide-ranging review of how the right to renew business tenancies is working and what options there may be for reform will close on 19 February 2025. The first phase of this consultation will look at whether tenancies should enjoy statutory security of tenure or not and if they should then whether the statutory mechanism should constitute an opt-in or an opt-out model. A second consultation is then planned to look further at the preferred model. 1954 Act reform has been simmering for some time but with a two-part consultation planned it seems unlikely that 2025 will be the year it reaches boiling point. Perhaps next year we will be able to report on what the new model will look like but for now it is a candidate for the consult box in 2025.

☑ Consult

High street rental auctions

New powers for local authorities to auction long term vacant commercial high street properties to new tenants on short term tenancies (first introduced by the Levelling-up and Regeneration Act 2023) came into force on 2 December 2024. For more information read ‘High street recovery – high street rental auctions (HRSA’s)‘.

The policy intent is to allow local leaders to tackle persistently vacant properties in city, town and village centres and stop “disengaged landlords from sitting on empty properties for more than 365 days in a 24-month period”. The regulations set out a complex and lengthy process with no guarantee that the property will be let at the end. It will be interesting to see whether the local authorities have the resource or indeed the inclination to exercise these new powers this year and ultimately whether the use or even the threat of the use of these powers will reverse the high street decline.

☑ Reform

Energy efficiency in buildings

The government has confirmed its commitment to reforming the energy performance of buildings regime by launching Reforms to the Energy Performance of Buildings regime.  The consultation which closes on 26 February 2025, includes proposed reform around what EPCs actually measure as well as when EPCs are required. Could 2025 be the year we learn of the future trajectory of MEES?  It is possible meaning there could be a tick in the consult and reform box. In any event it seems that the industry has been anticipating the change for some time and the market is already moving on an upwards trajectory in terms of requiring and implementing measures to achieve energy efficiencies in building stock.

☑ Consult and maybe ☑ Reform

Climate change

In 2023 the Law Society published its guidance on climate change risk. The property sector specific guidance is now eagerly anticipated and will provide further guidance on how conveyancers are expected to deal with climate change risk as part of the conveyancing process. This further guidance is likely to have a significant impact in shaping conveyancing practice this year both in terms of the types of environmental searches that are carried out and how conveyancers report to their clients on the results of those searches. Whilst not a legislative reform, the impact that this will have on the conveyancing process going forward is deserving of a tick in the reform box for 2025.

☑ Reform

Corporate reform

Companies House has provided some indication of its timeframe for implementing further parts of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) – Economic Crime and Corporate Transparency Act: outline transition plan for Companies House.

ECCTA has been heralded the “biggest changes to Companies House since its establishment in 1844”, including bolstering the role and enforcement powers of Companies House and increasing transparency in ownership and control of UK companies through the requirement for directors and certain shareholders to have their identities verified. Some of the changes were introduced from the outset, but others are being brought in over the course of the next few years because they will require more fundamental changes, not least in the systems and operation of Companies House. This is without doubt another tick in the reform box for 2025 although the process of corporate reform will extend beyond this year.

☑ Reform (ongoing)

Planning

All this with not even a mention of the proposed reforms to the planning framework. The much-publicised overhaul of the planning system to accelerate housebuilding and deliver new homes speaks for itself. With the promise of regular planning updates over the course of this year we put planning as a leading candidate in the reform box.

☑ Reform (ongoing)

Conclusion

With a question mark over how many of these proposals will reach the statute book this year, 2025 seems unlikely, once again, to be the year of a full-scale reformation. In the Chinese year of the snake, it seems fitting that with some slippery legislative customers, 2025 seems likely to be a year of some reform but also further consultation and we could well be talking of reformation for many years to come.

We will watch with interest and keep you updated along the way. Happy New Year!