In 2024, I wrote about the Leasehold and Freehold Reform Bill and the significant changes it could bring for leaseholders, freeholders and the wider property industry. Even then, it was clear that reform was about more than lease extensions and ground rents. Transparency around charges and standards of property management were also becoming increasingly important.
Two years on, the Government has published its response to the Strengthening Leaseholder Protections Over Charges and Services consultation, confirming new measures on service charges, building insurance and property management, with changes expected from 2027. The proposals are, in my view, a sensible step forward, particularly in improving transparency between leaseholders and those responsible for managing their buildings.
But there is still more to come, and arguably some of the most significant changes are yet to be decided. The Government is still to respond on major works, reserve funds and probably most importantly regulation of managing agents through mandatory qualifications (we’d like full regulation but we’re unlikely to get it).
What’s Changing for Leaseholders?
At its core, the changes are all about giving leaseholders further rights to key information – giving them even more transparency around what their service charges are being spent on.
One of the most significant changes will be a new annual report “to give leaseholders an insight into the health and condition of their building, plans for forthcoming major works and other useful information.” Landlords will also need to disclose relevant relationships with third parties, including managing agents.
Service charge demands will also become more standardised to help leaseholders better understand how their service charge money is being spent. Standardised service charge accounts will also finally be introduced – first promised in legislation nearly 25 years ago.
There will also be further transparency around building insurance, including information about relationships between landlords and other parties (managing agents, brokers and insurers), alongside clearer information about procurement, pricing and cover.
For leaseholders, another important change is the right to request information relating to service charges and the management of their homes. This is likely to be a significant burden on landlords and their agents who will generally need to provide information going back six years and explain clearly where information cannot reasonably be obtained.
The changes will apply in England, with leaseholders expected to start seeing changes during 2027.
What Does This Mean for Landlords and Managing Agents?
The consultation found that 84% of landlord and managing agent respondents expected to need significant system changes to meet the proposed information requirements. Many also highlighted the need to bring together information currently held across different systems, teams and third parties.
For larger portfolios, having accurate and accessible information that can be brought together when needed will be increasingly important. Property, service charge, insurance, compliance and asset records need to provide a consistent picture of each building, whether information is being requested by a leaseholder or used to make decisions about expenditure, risk and the future planning of an asset.
Further Changes Are Still To Come.
Arguably, the most important changes are still yet to be reported on. A separate response is still expected on reforms to the major works regime, mandatory reserve funds and regulation managing agents (likely to be only mandatory qualifications).
Major works and reserve funds will have significant implications for how expenditure is planned and funded, but should bring much needed certainty for managing agents when planning for the long term of the property and key asset in the buildings. While mandatory qualifications will raise expectations around professional standards for managing agents and bring comfort to leaseholders about the standards they can expect.
Effective Property Management Starts Before the Regulation Arrives
The reforms point to a wider shift in how property information needs to be managed. It is no longer enough for service charge, building management and expenditure information to exist somewhere within a portfolio. It needs to be accurate, accessible and capable of supporting both clear reporting and informed decisions.
This is where effective asset management can make a difference. Good portfolio oversight is not just about monitoring financial performance. It means having a clear understanding of the condition, compliance position, expenditure requirements and risks associated with individual assets, and using that information to inform decisions across the portfolio. As further reforms around major works, reserve funds and managing agent qualifications are developed, that level of oversight will become increasingly valuable.
For property owners and managers, the opportunity is to strengthen these practices now rather than wait for every aspect of the reforms to be finalised. Better oversight can support compliance, improve financial planning and give decision-makers a clearer understanding of the risks across their portfolios.
At Innovus, we support landlords, property managers, RMCs and developers with asset management, compliance and building safety. If you would like to discuss what the latest reforms could mean for your portfolio, get in touch with Felix and the Asset Management team.