Planning – National Planning Policy Framework published in 2024
The National Planning Policy Framework was revised on 12 December 2024 in response to the Proposed reforms to the National Planning Policy Framework and other changes to the Planning system consultation held between July and September 2024. The Framework sets out the government's planning policies for England and how these are expected to be applied. The latest revisions include the reintroduction of mandatory housing targets and changes to calculations on housing need, guidance on the approach to green belt land and more flexibility on affordable housing provision. Whilst local planning authorities scramble to address the changes, particularly in respect of housing targets, there is scope for developers to attempt speculative applications that may now be justifiable due to the default determination rules that apply if local policy plans are out of date, or the housing targets are not being met.
Whilst local planning authorities may still attempt to refuse these applications, we expect to see an increase to the number of successful appeals. We also anticipate an increase to the number of applications being recovered (i.e. taken over for determination) by the Secretary of State, Angela Rayner, who has already shown a distinct willingness to support developers’ plans, including from granting approval to schemes that were previously refused under the Conservatives (see the M&S decision update below).
Renters’ Rights Bill – leasehold reform (1)
This Bill has completed all initial stages in the House of Commons and has now progressed to the House of Lords. Committee Stage in the House of Lords is expected to take place on 22 April 2025. The wording of this Bill is seen to have shifted significantly in favour of tenants amid increased concerns and uncertainty for professional landlords across the private rented sector. The majority of the recent changes introduced to the latest version, including the abolition of advance rent payments have been heavily criticised by landlord bodies.
The new tenant-friendly bill, which abolishes no-fault evictions (Section 21), removes fixed term tenancies, expands grounds for possession, limits rent increases and bans bidding wars, is likely to cause significant disruption to the private rental sector. Impacts are likely to include:
- Landlords exiting the market – many landlords may feel they have reduced control over their assets, without the security of a fixed term tenancy or the ability to change their own plans, causing them to sell up, leading to a decline in private rental properties. The relative lack of transitionary provisions in the bill as compared with its predecessor leaves little room for landlords to plan for its implementation, either. For example, fixed term tenancies will automatically become periodic tenancies on a date specified in the regulations, save where there are ongoing possession proceedings. What’s more, Section 21 notices which are served before commencement date will become time-barred once the short grace period provided for in the Bill ends.
- Increased rents – a shrinking rental stock could drive up rents as demand outstrips supply, despite the bill’s rent regulation measures.
- Legal and administrative burdens – with no-fault evictions removed, landlords relying on expanded possession grounds may potentially lead to longer disputes, and increased costs. What’s more, as landlords will only be able to increase rents by serving a Section 13 notice once a year, there is greater risk of tenants (or indeed landlords) taking the matter to the First-Tier Tribunal for determination.
- Pressure on the Courts – landlords will only be able to evict after a hearing in front of a County Court Judge where they must prove that they are within the statutory grounds. The eviction process already faces serious significant delays and with more cases requiring litigation, an already stretched Court system would undoubtedly face further backlogs.
Longer legal processes are also anticipated making recovery of possession more challenging. Looking to the more distant future, though, landlords with rental portfolios will need to come back to the market for first time buyers and there may be new landlords entering the market that are comfortable with the new regime.
We have also identified the Renters’ Rights Bill as a key topic in the Professional liability section.
The Leasehold and Freehold Reform Act (LFRA) – leasehold reform (2)
The LFRA was passed on 24 May 2024 and is intended to improve the rights of residential long leaseholders in England and Wales. However, the vast majority of the provisions were not brought into force immediately. On 31 January 2025, new regulations enacted section 27 of the LFRA. These changes abolish the two-year ownership requirement for leaseholders to extend their lease or purchase the freehold. Other provisions of the LFRA that will be brought in via further secondary legislation include (i) a ban on the sale of new leasehold houses; (ii) an increase in the standard lease extension term for houses and flats to 990 years; and the (iii) removal of marriage value from the cost calculation for leasehold enfranchisement. Such reforms are expected to increase transparency as to the lease extension process as well as reducing the cost, which has been a long-term gripe of leaseholders. Landlords however may see a reduction in income with cheaper and less frequent lease extensions.
Commonhold White Paper: The proposed new commonhold model for homeownership in England and Wales - leasehold reform (3)
On 3 March 2025, Matthew Pennycook MP, the Minister of State for Housing and Planning, announced the publication of a White Paper containing proposed reforms to “reinvigorate commonhold through the introduction of a comprehensive new legal framework based on the vast majority of the recommendations made by the Law Commission in their 2020 report. This new legal framework will be supplemented by a ban on the sale of new leasehold flats, so that commonhold becomes the default tenure.”
The commonhold tenure was first introduced in 2002 as an alternative to leasehold, although it has failed to take off. This is because most developers and landowners are more comfortable with leasehold ownership. There has definitely been a reluctance to step into the relative unknown of the commonhold. However, this might be about to change.
Whereas leaseholders own a property for a fixed period of time, those with a commonhold tenure own a property as a freehold indefinitely, becoming known as a “unit owner”. Unit owners are entitled to become a member of the commonhold association, which owns and manages the common parts of the building or estate. These typically include the structural and external parts of a building as well as shared areas such as the roof and stairs. The unit owners are also subject to the rules and obligations contained in a “rulebook” called the Commonhold Community Statement (the CCS).
The immediate, apparent benefit of a commonhold tenure is that it provides for ownership of a freehold property, rather than a leasehold which is a diminishing asset in terms of value. On the other side of the coin, the main disadvantage of a commonhold tenure lies in the very nature of the commonhold association, which has responsibility for the upkeep, repair and insurance of the common parts. If the association fails to keep on top of these matters, there is a risk that the property could fall into disrepair and lose value; an unattractive proposition for mortgage lenders.
We await the draft Leasehold and Commonhold Reform Bill which Mr Pennycook has stated will be published later this year.
Consultation – Landlord and Tenant Act 1954
The Landlord and Tenant Act 1954 is one of the most significant and widely used pieces of legislation in the commercial property sector. It is also over 70 years old and is criticised by some as being out-of-date and not fit to deal with the current market.
On 19 November 2024, the Law Commission published the first step in a two-part review of Part 2 of the Landlord and Tenant 1954. It seeks views as to whether the current status quo of security of tenure for business tenants is appropriate and suitable for a modern commercial leasehold market. The consultation paper seeks views on four models as to how security of tenure could operate in the future:
- No security of tenure: this would not give tenants any protection and they would have to rely on negotiations with their landlord if they want to remain in premises.
- A ‘contracting in’ regime: again, less protection for a tenant and puts the landlord in a strong bargaining position during lease negotiations.
- A ‘contracting out’ regime: broadly the same position as currently exists but the Law Commission has said it could be tweaked to function better.
- Mandatory security of tenure: gives tenants the greatest level of protection and would simplify the grant process. However, there is no flexibility and it would significantly weaken a landlord’s negotiating position and reduce certainty of a lease end-date.
The first-stage consultation closed on 19 February 2025 and thereafter, the Law Commission will consider the responses received. A second, and more technical, consultation paper will then follow about the detail of how any recommended model should work. We will continue to monitor progress of these consultation responses.
Consultation – Energy Performance Certificates (EPCs)
The government has published the third in the current run of consultations relating to minimum energy standards in privately rented homes in England and Wales. This follows closely on the heels of the second consultation, which closed on 26 February 2025, relating to new metrics to assess energy efficiency.
The current consultation proposes raising the minimum EPC rating on residential properties from E to C by 2030, and considers other key issues including:
- Minimum spend – the proposal is that the minimum which landlords have to spend on energy improvements to qualify for an exemption to the requirement for a ‘C’ rating is £15,000 – up from just £3,500.
- Widening the scope – the consultation asks whether short-term lets (such as holiday lets) should be brought within the scope of the regime. The second consultation proposed that listed buildings are unambiguously brought within the scope of the regime – so the net is widening.
- Transitional provisions – the proposal is for new tenancies to meet the requirement by 2028, and all tenancies (new and continuing) would need to meet the higher standard by 2030.
- New metrics – although the subject-matter of the second consultation, one key question for landlords will be what ‘C’ looks like under the new metrics – although the proposal is for landlords to be able to rely on current valid EPCs for the time being.
Commercial landlords are still waiting for clarity on when or if the updated minimum requirements will apply to commercial lettings.
Landlords with affected properties will want to know what financial help is out there to pay for the works – and how far the green deal will be revitalised. They will need to assess their portfolio to identify upgrades needed, investigate grants / incentives (factoring in the cost cap when budgeting), and watch closely for further details on EPC reform this year and next. The current consultation closes on 2 May 2025.
Green Leases
ESG issues will have continued importance for landlords, occupiers and investors as they look to achieve their own sustainability targets and support the Government's goal of achieving Net Zero emissions by 2050. This encompasses not only the environmental performance of the premises but extends to include positive social impacts for local communities and areas. Green lease drafting continues to develop to reflect these broader ESG issues and in January 2024, the Better Buildings Partnership published an updated version of its Green Lease Toolkit.
Whilst the toolkit has no legal or regulatory status, it provides a clear framework for incorporating environmental and social issues into the leasing process, and green leasing, encompassing social impact, will remain an evolving area for real estate clients in 2025.
Redevelop v Retrofit
The “new or renew” debate remains a challenge for the property industry when dealing with existing building stock. The debate was front and centre at the end of 2024 when the Housing secretary Angela Rayner granted Marks and Spencer (M&S) permission to demolish and redevelop its flagship Marble Arch store. M&S secured the approval following a long and controversial battle of more than 3 years.
The M&S decision highlights the significance of the retrofit vs redevelopment debate with the increasing emphasis on sustainability and reducing embodied and operational carbon emissions. It will be interesting to see how the new Government elects to balance easing restrictions on development in urban areas while addressing issues of embodied carbon given the net zero transition and impacts on heritage.
In part, this was a political decision, but it is a strong indication about the future direction around how the Government will approach development projects.