On the horizon

In this seasonal edition of his quarterly column for Estates Gazette (published in the Christmas 2024 edition), Bill Chandler previews the most significant legal developments affecting real estate expected in 2025. 

Let it snow 

Forecasters are predicting a blizzard of changes in 2025 that will transform residential property law. 

The Renters’ Rights Bill is expected to become law during the first half of 2025. Although few of its wide-ranging provisions will be effective immediately, the government has previously committed to early implementation of the abolition of fixed term tenancies and the ban on section 21 ‘no-fault’ eviction. 

The ministerial statement on 21 November 2024 has promised to continue the staged implementation of the Leasehold and Freehold Reform Act 2024, the final Act passed by the previous administration.  The removal of the current two year ownership requirement before applying for enfranchisement or a lease extension is promised for January, followed by changes to the right to manage in spring 2025 and a consultation in summer 2025 on how enfranchisement premiums are calculated. 

Further consultations on the 2024 Act promised for 2025 will consider the changes to service charges and legal costs and its consumer protection provisions. 

The ministerial statement didn’t confirm when the ban on the sale of new leasehold houses and the increase in statutory lease extensions to 990 years will take effect, but these should be anticipated too. 

The 2024 Act also faces several judicial review challenges in 2025, in respect of which a permission hearing is expected in January. 

The ministerial statement also promises that the Leasehold and Commonhold Reform Bill mentioned in the King’s Speech will be published in the second half of 2025. This Bill will deliver previously-announced commitments to: 

• reinvigorate commonhold (which will be the subject of a White Paper in early 2025 and a consultation on banning new leasehold flats and converting existing flats to commonhold); 

• tackle ground rents in existing long residential leases; 

• remove the threat of forfeiture.   

We are also promised further consultations in 2025 on reforming the section 20 ‘major works’ procedure, regulating managing agents and ending ‘the injustice of fleecehold’. 

We can also expect some follow-up once the current consultation on reforming the Right to Buy closes on 15 January 2025. 

Residential rates of Stamp Duty Land Tax are also changing in 2025.  On 1 April 2025, the extended nil-rate band and first time buyers relief will revert to where they were before the infamous mini-budget of September 2022.  And, having surprised us all in the recent Budget by increasing the surcharge for additional dwellings, it remains to be seen whether the government will use 2025 to honour its manifesto pledge to increase the non-resident surcharge to 3%. 

In Wales, we are promised an amendment to Land Transaction Tax in 2025 which will deny multiple dwellings relief where the subsidiary dwelling exemption applies.  This will bring to an end the ability for taxpayers to have their cake and eat it by using the subsidiary dwelling exemption to avoid the additional dwellings surcharge whilst still treating the subsidiary dwelling as an additional dwelling for the purposes of claiming MDR.  However, the retention of MDR in Wales (for the time being at least) in other circumstances represents a significant - and potentially valuable – difference between LTT in Wales and the SDLT regime in England. 

All in all, a busy year in prospect for anyone involved in residential property - and I haven’t even mentioned the continuing saga of the TA6 Property Information Form, which will now extend into 2025. 

Miracle on ‘54 Street 

Although commercial real estate may not experience the same number of consultations, there will be significant interest throughout 2025 in the progress of the Law Commission consultation on reforming the business tenancy regime under the Landlord and Tenant Act 1954.  

Having previously been promised for last Christmas, the consultation was finally launched in November. The first phase – which concentrates on whether all business tenancies should enjoy statutory security of tenure and renewal rights, or none of them, or whether there should be an opt-in model or the current opt-out model - closes in February 2025.  

Once the responses to the first consultation have been considered, we are promised a second consultation examining how the preferred model should work. 

January sales 

There is widespread curiosity as to how the new ‘high street rental auction’ scheme will play out in 2025. The relevant provisions of the Levelling-up and Regeneration Act 2023 were brought into force on 2 December 2024.  

Will local authorities have the inclination and the resource to take advantage of the new procedure? When and where will the first rental auction take place? Will the threat of a rental auction force owners of vacant units to take action themselves?  And, ultimately, will it help to improve declining high streets and town centres?   

Happy new year 

Other things to look out for in 2025 include: 

Building Safety Act 2022 – expected developments in 2025 include progress with the Remediation Acceleration Plan that was launched on 2 December 2024, the introduction of the Building Safety Levy in autumn 2025, and the much-anticipated appeal in Triathlon Homes LLP -v- Stratford Village Development Partnership & others [2024] UKFTT 26 (PC) concerning Remediation Contribution Orders which is now scheduled to be heard by the Court of Appeal on 19 March 2025. 

‘Martyn’s Law’ - the Terrorism (Protection of Premises) Bill should become law, requiring that public venues are better prepared for terrorist attacks. 

Energy efficiency – the current consultation on Energy Performance Certificates (launched in December 2024) closes on 26 February 2025.  Any changes to the EPC regime also have the potential to affect the Minimum Energy Efficiency Standard (MEES).  And on the subject of MEES, hopefully we will finally learn the future MEES trajectory for commercial property.  The never-enacted 2021 proposals would have seen the first compliance window open in April 2025, which is obviously not now going to happen. 

Climate change risk – following a recent consultation, the Law Society’s practice note on climate risk and conveyancing is expected in early 2025. 

Exchanging contracts – will the Law Society project to produce new ‘2024’ codes for exchanging property contracts finally come to fruition in 2025? 

An earlier version of this article appeared in Estates Gazette.