Estate of play – private estate management reforms under the Leasehold and Freehold Reform Act 2024

With the government's unwavering focus on its housing targets, it seemed likely that the government would stall the proposed estate management reforms in the Leasehold and Freehold Reform Act 2024 (Act) in case they spooked developers and deterred housebuilding.

However, the government has shown itself committed to the reforms and has been consulting on implementing the estate management provisions in Part 5 of the Act. The consultation closed on 12 March 2026, and we are expecting the secondary legislation to follow swiftly now.

Once implemented, the practical impact of Part 5 for well-run, harmonious estates may well be limited to an additional administrative burden for estate managers and greater transparency for the homeowners. Nevertheless, there are very real concerns for estate owners and developers that the new regime will lead to residents challenging whether estate management charges are reasonable – and the ultimate risk of a substitute estate manager being appointed.

Will the changes affect all private estate management schemes?

Yes, the changes will affect all private estate management arrangements – whether these are flagship mixed-use schemes like King's Cross Central and Poundbury, prestigious residential neighbourhoods and housing estates which manage exclusive estate facilities such as golf courses or modest little suburban cul-de-sacs.

The driving force behind Part 5 is to tackle the exploitative practices or the failing or poorly managed schemes which have attracted regular press attention. The government's consultation paper was full of pejorative rhetoric about 'inferior' freehold estate amenities and 'fleecehold' private housing estates, and there is no doubt that serious issues afflict numerous housing developments. After completion, these schemes have fallen to private estate management arrangements where there is poor performance and a lack of accountability; residents find communal facilities are not properly maintained or receive extortionate bills for services and works that are carried out to a poor standard or not at all.

However, the Act will have a broad impact, extending far beyond poorly managed schemes to affect successful, well-run estates which exist to preserve the character and facilities of an area. It is very difficult to see how a 'one size fits all' approach can possibly work in practice for the enormous range of private estate management schemes out there, past, present and future – how can the same rules operate for small, residential developments and for enormous, complex mixed-use schemes where commercial offices, retail and hospitality sit alongside a small residential proportion? There are almost always unintended consequences or collateral damage when legislation is first enacted of course.

New rules for private estate management under the Leasehold and Freehold Reform Act 2024

Currently, the relationship between estate managers and owners of managed dwellings is governed by contract with minimal regulatory intervention. Estate charges are not subject to the service charge controls which are currently imposed on a landlord. The estate management provisions in the Act will change this by introducing a swathe of new protections for freehold and long-leasehold owners of managed properties.

The core provisions are summarised as follows:

• Reasonable estate management charges: management charges will only be payable if they are 'reasonable'. They must be 'reasonably incurred' and the works or services must be of a 'reasonable standard'.
• Administration charges: any administration charges will also need to be reasonable and set out in a schedule of administration charges.
• Consultation requirements: estate managers must consult owners before undertaking works surpassing a threshold cost, or the owners' contribution is limited to the threshold amount.
• Payment demands: demands for management charge payments will have to be made in a prescribed form and, unless an owner has prior notification of its liability to contribute, within 18 months of incurring the relevant costs.
  
  Where a payment demand is not in the prescribed form, any contractual provisions regarding non-payment or late payment will be void.

• Annual reports and information: estate managers will be obliged to produce annual reports within one month after the relevant accounting period, and to provide specified estate management information to owners when requested. Owners may also request sales information.
• Codes of management practice: the management codes of practice which currently apply to leasehold property managers will extend to estate managers.
• Substitute manager: owners may make a tribunal application to appoint a substitute manager in cases of serious management failure.

Those familiar with the existing legislation regarding service charges on flats will recognise that the government is seeking to use that legislation as a template for freehold schemes.

While the provisions establish the key requirements, the devil will be in the detail. The government's consultation sought feedback on the significant amount of detail which will need to be introduced in the secondary legislation.

What is a 'reasonable' estate management charge?

Disappointingly, the consultation did not explore what will be considered 'reasonable' in the context of estate management charges, and Part 5 itself contains no principles or criteria for judging 'reasonableness'.  

Where items are being replaced, we might expect that a 'reasonable' replacement should be judged in the context of the existing item. However, will replacing 'like for like' be considered 'reasonable' if, for example, a cheaper, less sustainable, less aesthetically appealing product is available but which has broadly the same functionality and endurance?

In particular, the consultation did not explicitly consider sustainability issues, which is surprising given the government's net zero drive; using sustainable materials and methods may be more environmentally friendly but less 'reasonably' priced.

Design, sustainability and aesthetic are key to many high-quality estates and placemaking schemes. For landowners and developers of large or phased developments, quality will also be intrinsic to their future unit sales. Premium design elements like public art, water features, high spec public spaces and bespoke street furniture go beyond functional requirements and maintaining them may not be cost 'efficient'. Residents who have paid more – for homes and areas which offer them a higher quality local environment with 'luxury' amenities and additional benefits – may be prepared to pay for their continuing upkeep but not all residents will share that view necessarily and may want to challenge costs. 

The nuclear option: when can a tribunal appoint a substitute estate manager?

The designated tribunal will be able to appoint a substitute manager in cases of management failure, if the tribunal considers this is 'just and convenient' in all the circumstances of the case. There is a prior process, involving an owner serving a notice of complaint with a six month remedy period and then a final warning notice.

One of the specified circumstances for the tribunal to consider is where an estate management charge is assessed as 'unreasonable' ie where the amount is unreasonable having regard to the relevant item or the item is of an unnecessarily high standard.

For estates where high quality upkeep is key, the 'unnecessarily high standard' criteria is clearly a concern as services and charges are likely to be premium and potentially beyond what is strictly 'necessary'.

It is unfortunate that the consultation only focused on the procedural aspects of the substitute manager process rather than consulting on the 'just and convenient' threshold or the specified circumstances for the tribunal to consider.

The appointment of a substitute estate manager would potentially overturn a core tenet and safeguard for high quality master-planned developments and placemaking schemes where legacy and long-term stewardship is key. Will this risk potentially disincentivise landowners and developers from carrying out these schemes in future? Unfortunately, until we see the detailed regulations, we cannot properly assess the risk and sensibly consider any other options for potential structuring or safeguards to protect against substitute estate managers being appointed.

Nevertheless, there are some legacy developers who are happy to see schemes built out and then responsibility transferred to a management company run by the residents in any event, empowering the estate community going forwards.

The future for private housing estates

While the restrictions in the Act do not amount to a ban on private estate management schemes, reducing their prevalence is being considered by the government with an associated consultation which also closed on 12 March 2026. In addition, the Law Commission's 14th Programme of Law Reform is considering how to give residents greater control over the management of their estates, akin to the Right to Manage arrangements for qualifying leaseholders for their buildings.

The government's related consultation recognised the key conundrum that local authorities are unwilling to adopt shared amenities on estates. Although the local authority will benefit from the council tax, business rates and economic growth that a new development brings to the locality, it is often unwilling to accept the responsibility for public realm upkeep. This is typically due to financial and resource constraints, even though there is potential to cover off the future upkeep with section 106 and CIL contributions from the landowner/developer.

Where a housebuilder is chasing a quick buck rather than creating a legacy development, it is disincentivised to provide infrastructure and facilities that meet adoptable standards; the cheaper and simpler route is to opt for private estate management arrangements where the long-term liability is transferred to the homeowners.

The consultation considered sensible questions around this challenge, and was written in a much more balanced tone, recognising that there is 'no one size fits all' approach necessarily.

Getting your house in order – what developers, landowners and estate managers should be doing now

Part 5 of the Act will have a significant impact on estate management practices; landowners, estate managers and developers may want to start reviewing management practice and process in anticipation of the forthcoming changes.

For freehold and long-leasehold owners in poorly managed schemes who resent making large annual payments for estate management services over which they have little or no visibility, positive change is on the horizon. Owners will have powers under the Act to challenge costs and hold managers accountable for their actions.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2026