2025 Leasehold Reform: Real Changes to Ground Rent and Service Charge Controls

TL;DR Summary

• The 2025 Leasehold Reform package introduces tighter rules on ground rent, stronger limits on unreasonable service charge increases, and clearer transparency requirements for managing agents.
• Leaseholders may see more predictable annual costs and improved access to breakdowns, invoices and challenge routes when charges appear unfair.
• Check your lease, request full service charge accounts, and challenge unexplained increases through the First-tier Tribunal if necessary.

After years of calls for change, the UK Government’s 2025 Leasehold Reform measures are beginning to reshape how freeholders and managing agents handle ground rent and service charges. Leaseholders have long faced unpredictable increases, limited transparency and difficulty challenging unreasonable demands. From 2025 onwards, several new protections aim to make leasehold living fairer and more affordable.

This guide explains the real, practical changes now affecting leaseholders across England and Wales, including what has improved, what still needs further reform and what you can do if your charges have risen unfairly this year.

What Has Actually Changed in 2025?

The reforms introduce multiple updates, but three areas matter most to everyday leaseholders:

1) Ground Rent Controls Strengthened

The 2022 ban on ground rent for new leases remains in place, but 2025 reforms go further by:

• restricting the circumstances in which ground rent can rise
• forcing clearer disclosure on how rent reviews are calculated
• making it easier for leaseholders to challenge disproportionate increases

Whilst existing leases are not automatically reduced to peppercorn rent, freeholders now have less room to impose aggressive escalations tied to inflation or fixed multipliers.

2) Service Charge Increases Face New Limits and Transparency Rules

Service charges have historically been one of the most contentious aspects of leasehold living. In 2025, reforms introduce:

• Mandatory itemised breakdowns showing how charges were calculated
• Evidence requirements for large increases compared with previous years
• Greater scrutiny of managing agents, including professional standards obligations
• Clearer rights for leaseholders to request accounts, receipts and long-term maintenance plans

Importantly, managing agents must now justify sharp increases — especially when linked to maintenance, insurance, major works or administration fees.

3) Quicker and Easier Challenge Routes

The 2025 reforms simplify how leaseholders challenge unfair charges:

• The First-tier Tribunal (Property Chamber) now has streamlined procedures for disputes.
• Leaseholders no longer need to meet as many procedural hurdles to question reasonableness.
• Freeholders must provide evidence before demanding payment for disputed items.

This reduces the historical power imbalance between freeholders and leaseholders.

What Leaseholders Are Seeing in Real Life

Early signs from 2025 show mixed but generally positive results:

• Ground rent increases that previously rose automatically now require clearer justification.
• Service charge hikes above 10–15% are being questioned more frequently by leaseholders — many freeholders are backing down once required to show evidence.
• Insurance commissions, a historically opaque cost for leaseholders, face new scrutiny under transparency rules.
• Major works budgets must now reference longer-term maintenance plans rather than ad-hoc decisions.

Leaseholders who have historically struggled with sudden financial demands are reporting improved communication and fewer unexplained surcharges.

How to Reduce Your Leasehold Costs in 2025

1. Request Full Accounts and Evidence

You have a legal right to detailed service charge accounts, including receipts, contractor invoices and breakdowns. Many unjustified increases collapse once evidence is requested.

2. Compare Quotes for Major Works

If your freeholder or managing agent has not sought competitive quotes, you can challenge inflated costs at the tribunal.

3. Check Whether Your Ground Rent Escalation Is Still Valid

Some leases contain outdated or unfair escalation clauses that the 2025 reform now restricts.

4. Join or Form a Leaseholder Association

Collective requests carry more weight, and this may help improve transparency and reduce unreasonable charges.

5. Consider the Right to Manage (RTM)

If managing agent performance remains poor, leaseholders may jointly pursue RTM to take control of management functions.

Common Questions (2025)

• Q: Does the reform abolish ground rent entirely?
  A: No, but it limits the scope for increases and strengthens challenge rights.
• Q: Can service charge rises still happen?
  A: Yes, but larger rises must be justified with evidence and clear reasoning.
• Q: Has the tribunal process really become easier?
  A: Yes — leaseholders now face fewer procedural barriers and can raise challenges more quickly.
• Q: Are freeholders complying?
  A: Early evidence suggests improved transparency, but compliance varies by managing agent.

Sources & Further Reading

• UK Government — Leasehold Reform Policy Updates
• First-tier Tribunal (Property Chamber) Guidelines
• Leasehold Advisory Service (LEASE) — Service Charge and Ground Rent Guidance

This article provides general information and should not be considered legal advice. Leasehold charges depend on individual leases, freeholder decisions and the specific rules applied by your local tribunal.