2025 Half-Year Review: Great Estates and the Shifting Legal Landscape

At the start of 2025, we published an Insight on Great Estates: What property law developments are expected in 2025? Having reached the half-way point of 2025, we take stock of the developments we have already seen this year, consider those which are still to come and assess the impact.

Seismic changes to the residential landscape remain the key disruptor for Great Estates in 2025, with developments to both leasehold and commonhold reform together with the most substantial changes to the private rented sector for nearly 30 years. Challenges concerning Building Safety, Planning and Energy Efficiency are also unfolding and these too will have considerable implications for Great Estates.

Leasehold reform

2024 saw the Leasehold and Freehold Reform Act 2024 (“LAFRA 2024”) hit the statute books during the wash-up before the general election. LAFRA 2024 will make substantial changes to lease extensions, enfranchisement, service charges payable under long residential leases and freehold estate management charges when its provisions are fully brought into force.

Having inherited LAFRA 2024 from the previous Government, the reforms are being introduced in stages and subject to more detailed consultation. 2025 has so far seen the implementation of two aspects of LAFRA 2024.

Qualifying criteria

The first reform revised the qualifying criteria for statutory lease extensions of flats and freehold acquisitions of houses so that it is no longer necessary to have owned a property for 2 years before making a claim.

Changes to RTM legislation

The second reform, introduced in March 2025, saw the non-residential limit on right to manage (“RTM”) claims increase from 25% to 50%. The impact of this change means more mixed-use buildings have been brought within the scope of RTM and buildings which previously would not have qualified because the commercial or non-residential parts exceeded 25% are now subject to RTM claims. Following this change, Great Estates will be seeing new claims to acquire RTM in respect of buildings where the right was previously not exercisable. The costs position in relation to RTM claims has also been changed. Previously, the RTM company and its members would be liable for all costs incurred as a consequence of the service of a claim notice. The amendments mean that the starting point is now that an RTM company and a member of an RTM company will not be liable for any costs incurred by a landlord or other person as a result of service of a claim notice unless allowed by new permitted costs provisions of the Commonhold and Leasehold Reform Act 2002. The impact for Great Estates is that they will suffer a shortfall in legal costs for considering the validity of RTM claims.

Other LAFRA 2024 provisions

Other key provisions of LAFRA 2024 remain unimplemented at this stage, including:

• The changes meaning that a tenant will acquire a 990-year lease extension rather than an extension of 50 years for a house and 90 years for a flat
• The increase of the non-residential threshold for collective enfranchisement claims from 25% to 50%. 

The challenge to LAFRA 2024 valuation methodology

For Great Estates, the biggest cause for concern around LAFRA 2024 remains the provisions which alter the valuation methodology for calculating premiums payable. The details of these changes haven’t been announced yet, but the main impact will be a significant reduction in the premiums payable by leaseholders for lease extensions and enfranchisement.

A number of landlords have brought judicial review claims against the Government in respect of the valuation elements of LAFRA 2024 and the proceedings were heard in mid-July 2025 with judgment reserved until a later date.

Whilst the Government has not addressed the impact of the judicial review proceedings on the timings for the implementation of LAFRA 2024, Matthew Pennycook, Minister of State for Housing, Communities and Local Government has suggested that the Government remains intent on bringing the remaining provisions of LAFRA 2024 into force. In the House of Commons on 9 June 2025, he indicated that the Government intends to progress “the implementation of reforms to the leasehold system that are already in statute, whilst at the same time undertaking the work required to bring forward the wider set of reforms necessary to end the feudal leasehold system for good”.

Future proposals for leasehold reform

Matthew Pennycook also suggested the Government had plans to:

• review ground rents in existing long residential leases;
• set out its proposed approach to enabling conversion of existing leaseholds to commonhold; and
• publish a consultation on the consumer protection provisions in LAFRA 2024.

The Government has already delivered on the third item with the recently launched consultation entitled: “Strengthening leaseholder protections over charges and services: consultation”. The consultation discusses the implementation of the provisions in LAFRA 2024 concerning service charge and estate management charge regulation which will introduce standard form service charge demands, budgets and accounts. LAFRA 2024 also includes onerous provisions which restrict a landlord from recovering litigation costs, such as any legal costs incurred in pursuing a leaseholder for a breach of covenant in the Court or Tribunal, by way of service charges or administration charges unless a Court or Tribunal has made an order confirming their recovery. This could cause major cash-flow issues for building owners (who would have to fund litigation costs out-of-pocket). If landlords have to incur further costs seeking an order permitting recovery of costs via service or administration charges, there is also a danger of increasing the costs payable by leaseholders in the long run.

The consultation goes further and invites comments on proposals to change the statutory consultation process for major works and qualifying long term agreements, which would require new leases to contain provisions to enable landlords to create a reserve fund and the ability to vary existing leases more easily to include a reserve fund where such provisions are absent. Great Estates may wish to respond to the consultation before its closure on 26 September 2025. Please read more in our Insight: Government launches consultation on “switching on” provisions regulating service charges and estate management charges in the Leasehold and Freehold Reform Act 2024.

Leasehold and Commonhold Reform Bill

March 2025 saw the publication of the Government’s “Commonhold White Paper: The proposed new commonhold model for home ownership in England and Wales”.

This set out the Government’s plans for commonhold to become the predominant form of home ownership in England. Rather surprisingly, it also suggested that the commonhold structure would be suitable for commercial settings such as commercial buildings, retail, industrial parks and shopping centres. However, no further detail on how the structure would work within these wider settings was detailed in the White Paper.

The Government’s initial focus is a ban on the sale of new flats using the traditional leasehold structure and a requirement that new flats be sold on a commonhold structure. The Government is planning a consultation during the second half of 2025 on the detail behind this proposal with the Draft Leasehold and Commonhold Bill also expected to be presented to Parliament.

The compulsory sale of new flats on a commonhold basis will have less of an impact on Great Estates than developers, but the White Paper also explores amendments to the existing commonhold process to enable easier conversion from an existing leasehold structure to commonhold. Conversions from leasehold to commonhold would mean a shift from the freeholder being in control of the building to a situation where they are just one of the owners, with shared responsibility for the building’s management. This would fundamentally alter the residential landscape and have an enormous, and potentially very detrimental, impact on Great Estates, who would lose ownership and control of parts of their portfolios. This could lead to the fragmentation of carefully curated parts of London that Great Estates have been stewards of for many years, undermining placemaking initiatives, a principal benefit of the common ownership of large estates. Navigating the conversion process is likely to be time-consuming – and potentially costly – and if residents cannot agree on maintenance, repair and management decisions, Great Estates may find themselves having to bear that responsibility in the future.

Renters’ Rights Bill

The other significant piece of legislation currently making its way through Parliament is the Renters’ Rights Bill (“the Bill”) which is expected to receive Royal Assent in early Autumn 2025. It will primarily abolish fixed term Assured Shorthold Tenancies (“ASTs”) and prevent landlords from terminating tenancies on a no-fault basis by serving a Section 21 Notice. Unless the rent exceeds £100,000 per year or the property is let to a company, the default position will be that a tenant will acquire an assured periodic monthly tenancy. There will also be restrictions on accepting rent payments in advance if these exceed one month’s rent. This is a particularly pertinent issue for Great Estates where prime property is involved, often at high rents and with overseas tenants. In these circumstances, accepting upfront rent payments can be a helpful tool in managing risk.

Landlords who wish to increase the rent will need to follow a statutory process giving tenants two months’ notice of the increase. Tenants will be entitled to challenge the increase in the First-Tier Tribunal (Property Chamber), with the increase only taking effect from the date of determination.

Landlords will need to prove a ground of possession in order to terminate a tenancy and it is likely that more matters will proceed to a Court hearing than under the Section 21 regime. This is likely to significantly increase the time it takes landlords to obtain possession, and the costs involved. Where the ground of possession is rent arrears, the Bill increases the amount of arrears which must be outstanding to obtain a mandatory possession order from 2 months to 3 months. The other main development is the creation of a private rented sector database. All landlords are likely to need to comply with certain requirements to remain active on the database to let properties, leading to additional administrative time and costs. Finally, the Government will apply the Decent Homes Standard which currently affects social housing to the private rented sector and has launched a consultation: “Consultation on a reformed Decent Homes Standard for social and privately rented homes” which closes on 10 September 2025. For more information see our Quick Read: Government launches consultation on extending Decent Homes Standard to private rented sector.

We are monitoring developments on our Essential Residential Hub and on our timelines: Evolution of the private rented sector and Changing landscapes in residential leasehold.

New edition of professional standard on service charges in commercial property

In June 2025, RICS published the 2nd edition of Service Charges in Commercial Property, Professional Standard, better known in the industry as The Code. The Code is mandatory for all RICS-accredited professionals and represents a minimum level of compliance. The 2nd edition replaces the 2018 version and comes into effect on 31 December 2025. It seeks to improve overall standards and promote greater transparency, fairness, and consistency in the management and administration of service charges across commercial properties. It also aims to ensure that budgets and year-end certificates are delivered in a timely manner and encourages effective dispute resolution. In addition, The Code provides guidance to owners or occupiers and service charge managers on the negotiation, drafting, interpretation and operation of leases, in line with best practice. Whilst The Code does not override lease terms, it is often referred to in lease negotiations with tenants wanting landlord obligations to mirror the standards prescribed by RICS.

Energy Efficiency

With the UK’s net zero goal of 2050 drawing closer, there continues to be close scrutiny around the energy efficiency of buildings, which contribute significantly to the UK’s total emissions.

Currently, a residential or commercial property must have a minimum Energy Performance Certificate (“EPC”) rating of E or higher for landlords to lawfully let it, although the Government approaches residential assets (known as domestic properties) differently to commercial assets (known as non-domestic properties). For both residential and commercial properties, the past few years have seen significant uncertainty over the future trajectory of minimum EPC ratings with shifting government targets and evolving methodologies.

Residential landlords previously faced a minimum EPC rating of C by 2025, however this was scrapped by Rishi Sunak in 2023 and the position has been unclear since then. The Government ran a consultation between February and May 2025 on raising the minimum energy efficiency standards (“MEES”) in privately rented homes in England and Wales to the equivalent of EPC rating “C” by 2030. The results of that consultation are expected during 2025.

Unhelpfully, the Government’s proposals for commercial property are also unclear. The previous Government announced targets to raise the minimum EPC rating for commercial properties to C by 2028 and B by 2030 and published a consultation in 2021 on the framework to improve implementation and enforcement of the EPC B target by 2030. The results of this consultation have still not been published. Whilst the Government’s previous announcement that a response would be published “early in 2025” has not been adhered to, a response is expected later this year.

Further certainty around both domestic and non-domestic MEES changes, including the compliance windows and available exemptions, will be helpful for Great Estates, especially those with a high proportion of heritage buildings. The standardised assessment methods used for EPCs do not always account for the complexities of heritage buildings which can lead to inaccurate ratings and potentially misleading improvements. The MEES consultations for both domestic and non-domestic properties acknowledged that some standard EPC recommendations may not be suitable for heritage buildings, and it is hoped that the Government’s response addresses these challenges.

Proposed changes to EPCs

The Government consulted at the end of 2024 on proposed reforms to the energy performance in buildings regime, which will affect both domestic and non-domestic buildings and aim to improve the accuracy and usefulness of EPCs. It is anticipated that a more complete representation of building energy performance will better meet the needs of building owners and users, as well as aligning the framework with the Government's net-zero goals. Any changes are expected in the second half of 2026. The key proposals focus on how energy efficiency is assessed by exploring the addition of other metrics to the basic carbon test, such as energy use, fabric performance and smart technology. The Government also proposes that the “shelf life" of EPCs should be reduced to 2 years from the current 10-year validity period, that an EPC must be in place throughout the term of a lease (not just at commencement) that compliance and enforcement be improved and that the exemption for heritage buildings be removed. As detailed above, EPCs can be problematic for heritage buildings and the consultation included an express acknowledgment that some of the generic EPC recommendations are not appropriate for heritage buildings. The Government has said that it is seeking to make sure that EPC recommendations are tailored appropriately to take account of the historic nature and architectural features of buildings and that existing exemptions under MEES would remain.

Great Estates, as owners of both residential and commercial buildings, will be interested in keeping a keen eye on how the regulatory energy performance of buildings requirements evolves. Any changes will be particularly important given the increasing use of EPCs to meet sustainability reporting requirements.

Short-term lettings

The short letting trend in London and other popular towns and cities, through sites including Airbnb and Booking.com, shows no signs of abating during 2025. For landlords, including Great Estates, short term lettings of this kind can cause significant management issues with complaints from other occupiers in the building around noise, nuisance issues, security problems and a loss of control over their buildings. This in turn has led to an increase in property management disputes and litigation by those landlords. Such enforcement action usually arises out of long leaseholders breaching their leases by letting on a short-term basis or local planning legislation, if properties are let for more than 90 nights in a year (whether consecutive or not).

Provisions in the Levelling-Up and Regeneration Act 2023, which may be brought into force in 2025, give the Secretary of State the power to make regulations governing a short-term lettings registration scheme in England. A consultation was carried out in 2024 by the previous Government, but the results have not yet been published. Alongside this, there are potential powers to introduce a use class for short-term lets and new permitted development rights. This would provide flexibility so that planning permission would be required:

• where a residential property moves from being occupied by the homeowner to being let on a short-term basis; and
• in areas where short lettings are of particular local concern. 

Two private members’ bills are currently before Parliament demonstrating that short letting is an issue of concern to many different stakeholders. The Short-Term Lets (Planning Permission) Bill was introduced to the House of Commons on 2 June 2025, with the second reading due to take place on 12 September 2025. It intends to introduce a requirement for planning permission to be granted in order to change a residential home to a short-term let in England. As it is a private members’ bill, it is unlikely to become law but will prompt debate on the subject. Another private members’ bill in the form of the Short-Term Let Accommodation Bill was introduced to the House of Commons on 16 October 2024 with a second reading on 11 July 2025. This Bill provides for the local licensing of short-term let accommodation and enables the creation of regulations governing such a licensing scheme. Regulations may include the ability to attach conditions to the grant of planning permission for new residential property prohibiting the use of that property as short-term let accommodation.

Construction and building safety

A long-standing shortage of skilled labour continues to hamper the construction sector. The shortage is projected to worsen with a significant proportion of the existing workforce reaching retirement age in the coming years. Earlier this year, the Government announced its intention to invest up to £625 million to tackle skills shortages in the construction sector, which is expected to create up to 60,000 more jobs for engineers, electricians and joiners by 2029. In the meantime, the shortage is likely to continue to drive up labour costs on major works projects for Great Estates.

A number of Great Estates have buildings over 18 metres in height (or at least seven storeys) and with at least two residential units which will be subject to the higher-risk buildings (“HRB”) regime in England with statutory responsibilities as an accountable person or principal accountable person under the Building Safety Act 2022 (“BSA 2022”). Where those buildings are wholly or partly sublet, issues may arise around granting consent to works, involving an analysis of whether those works require the consent of the Building Safety Regulator (“BSR”). These issues apply equally to let residential and commercial parts of a mixed-use HRB unless the commercial parts are an independent section, as defined in the relevant legislation. Significant delays are being reported by those who have had to grapple with the building control gateway regime since its introduction in September 2023. These apply both to new developments and to certain works to existing HRBs.

An inquiry has now been launched into building safety regulation to be led by the House of Lords Industry and Regulators Committee, focussing on the BSR. After public evidence sessions in the coming months, the Committee is expected to report on its findings to the House of Lords in Autumn 2025.

In the meantime, on 30 June 2025, the Government announced reforms to the role of the BSR in an attempt to ease the delays. These will include:

• a new ‘Fast Track Process’ bringing in building inspector and engineer capacity within the BSR to tackle delays experienced in the current outsourcing model; and
• the creation of a new arm’s length body to MHCLG to take over the BSR role from the Health and Safety Executive. 

The Government has presented the Fire Safety (Residential Evacuation Plans) (England) Regulations 2025 to Parliament, which will come into force on 6 April 2026. These apply to HRBs but also to 11 to 18 metre buildings with a simultaneous evacuation strategy. The Regulations will mandate Personal Emergency Evacuation Plans (“PEEPs”) for all those residents who need them due to mobility issues or other condition which means their ability to evacuate may be impaired.

We have also seen some tensions appearing between Regulations passed to implement the BSA 2022 and various guidance issued by the Government as to how to interpret the Regulations; notably, in the decision in Monier Road Limited v Nicholas Alexander Blomfield and Other Leaseholders [2025] UKUT 157 (LC) (also known as the Smoke House and Curing House case) concerning whether rooftop gardens should be regarded as a storey for the purpose of determining whether a building is an HRB. This has not yet been resolved; because the Upper Tribunal confirmed that the First-Tier Tribunal had no power in that case to determine whether the building was an HRB, as the parties had already agreed that it was not.

Planning

The Government has been consulting on a wealth of potential planning reforms including:

• Improving the implementation of Biodiversity Net Gain (“BNG”) for minor, medium and brownfield development (a live consultation which closes on 24 July 2025). Proposals include: removing BNG requirements for minor development (for example, including up to 9 residential homes), expanding the use of the “Small Sites Metric” for larger schemes, and removing the Spatial Risk Multiplier for minor development purchasing off-site units. The Spatial Risk Multiplier has the effect of increasing the number of BNG units required to be purchased (and therefore increases the cost) where these units are not local to the development in question. As it can be difficult to provide off-site BNG close to development within central London, Great Estates could be impacted by this change.
• Reform of planning committees’ technical consultation (a live consultation which closes 23 July 2025). Proposals include the introduction of a scheme of delegation that would categorise planning applications into two tiers: Tier A – which would include types of applications that must be delegated in all cases; and Tier B – which would include types of applications which must be delegated to officers unless the Chief Planner and Chair of Committee agree it should go to Committee. Tier A would include (among others) all householder applications, reserved matter approvals, Section 96A non-material amendments and prior approvals. Tier B would include Section 73 applications (applications to vary permissions in a way that is more significant than a non-material amendment). The intention is to reduce the number of applications to be determined by planning committee and introduce mandatory training for committee members. This is intended to generate faster, more consistent decision making which should benefit any development including those in Great Estates.

In addition to consultations, the Government has announced that it intends to reform the planning appeal process for written representations. The intention is to remove the “final comment” stage for the majority of written representation appeals and limit documents that can be submitted as part of an appeal to the application and a short statement. It is expected that these reforms will be introduced by the end of this year with the aim of speeding up the planning process.

Landlord and Tenant Act 1954 (“the 1954 Act”): Business tenancies

The Law Commission’s initial consultation on whether the current model of security of tenure should be retained or varied closed on 18 February 2025. The results were published on 4 June 2025 and the Law Commission’s initial conclusions are that contracting out remains the right model of security of tenure, that the types of tenancy that are already excluded from the 1954 Act should stay excluded and that there was support for increasing the duration of tenancy that can benefit from security of tenure under the 1954 Act from 6 months to 2 years, the latter point increasingly relevant for Great Estates with the post-Covid rise of shorter-term commercial lettings. The Law Commission will be proceeding with phase 2 of its consultation towards the end of 2025 which will look at the operation of the statute, including the forum in which disputes are heard, grounds of opposition and rent determinations, amongst other things.

Terrorism (Protection from Premises) Act 2025 (also known as Martyn’s Law)

This piece of legislation received Royal Assent in April, but the Government has indicated that there will be a 24-month period for implementation to allow those impacted to prepare. It will affect retail, entertainment and leisure facilities and certain parks and gardens within the portfolios of Great Estates. The overarching mechanism in the Act is that those responsible for qualifying premises or qualifying events must ensure public protection measures are in place to reduce the risk of physical harm to members of the public attending the premises or event from acts of terrorism.

There is a standard duty for qualifying premises which are those where 200 or more people are likely to be present at the same time. Qualifying events are those where 800 or more people are likely to be present and the event is ticketed, governed by a membership scheme or other condition of entry and includes outdoor events and those held on open land. These attract the enhanced duty, as do qualifying premises with a capacity for 800 or more people to be present at the same time. The duties may lie with the owner or tenant of premises and/or the ultimate owner of the land.

A number of Great Estates hold events across their commercial premises and green spaces within their estate. Whether the Act will apply will depend on the nature of the area where the event is held and whether or not it is ticketed or has an entry fee. If the event is held across a number of premises (whether qualifying or not) and wholly or partly outdoors on part of an estate, the Act will apply if the event is ticketed and/or there is an entry fee, membership scheme or other condition governing entry and 800 or more are expected to be present at the same time. The controller of the event may have enhanced duties under the Act. In addition, the responsible persons for each of the qualifying premises may have separate responsibilities under the Act.

Restrictions on upwards-only rent review clauses

This English Devolution and Community Empowerment Bill 2024/2025 was introduced to Parliament on 10 July 2025. Within a wide-ranging piece of legislation, and, without prior consultation, the Government has included proposed changes to the 1954 Act to regulate rent review provisions in commercial leases and prohibit upwards-only rent review clauses in new commercial leases. The prohibition will apply to all commercial leases which are granted after the relevant provisions of the Bill come into force, whether or not the lease is contracted out of the 1954 Act, as well as 1954 Act lease renewals entered into after the provisions become law. The prohibition will affect rent reviews governed by traditional market rents, index-linking or turnover rents but not where the lease provides for fixed or stepped rent increases.

Where the prohibition applies, any review clause that contains an upwards only provision, will be of no effect and instead the reviewed rent will be determined by the reference amount, i.e. the open market or the index linked amount. There is a long way to go before these proposals become law but an initial response from the Chief Executive of the British Property Federation suggests there are serious concerns about the Government interfering with “long-established commercial leasing arrangements without any prior consultation or warning”. Whilst Ireland banned upwards-only rent reviews in commercial leases in 2010, the lack of advance consultation with the UK property industry has seen the proposals sending shockwaves through the industry. Significant debate is expected and therefore, we will have to wait and see whether these proposals ultimately become law.

Please contact your usual Charles Russell Speechlys contact if you would like to discuss any of these issues.