Leasehold & Freehold Reform Act

By Lucy Riley

Legal Director

Unexpectedly, the Act passed into Law on 24th May 2024 as part of the “wash-up”. i.e. last minute legislation before parliament closed down.

The Act’s provisions are not yet in force but certain parts of the Act, dealing with amendments to the Building Safety Act 2022, rent charges and the recovery of litigation costs in service charge disputes are expected to come into force towards the end of July 2024.

The remainder of the Act will require implementation via secondary legislation which will be a matter for the next Government.

The Act’s provisions will (eventually):

  • Increase the standard lease extension length for both houses and flats to 990 years.
  • Make it cheaper for leaseholders to extend their lease or exercise their collective enfranchisement rights via changes to the calculation of the price payable and provide that they will no longer have to pay their freeholder’s costs.
  • Ban the sale of new leasehold houses (with certain exceptions).
  • Remove the two-year ownership requirement before the right to extend a flat lease or buy the freehold of a house can be exercised.
  • Change the qualification criteria for mixed use premises in enfranchisement and right to manage claims to increase the maximum for non-residential parts to 50%.
  • Require that landlords take leases back of non-participating flats and non-qualifying areas of the building, including commercial areas, in enfranchisement claims.
  • Make it easier for leaseholders to take over the management of their building and appoint a new manager/managing agent.
  • Increase the transparency of service charges by making freeholders or managing agents issue bills in a standardised format that can be more easily scrutinised and challenged.
  • Extend access to redress schemes for leaseholders to challenge poor practice.
  • Make buying or selling a leasehold property quicker and easier by setting a maximum time and fee for the provision of home buying and selling information.
  • Grant homeowners on private and mixed tenure estates comprehensive rights of redress, so they receive more information about what charges they pay, and the ability to challenge the reasonableness of those charges.
  • Ban opaque and excessive buildings insurance commissions for freeholders and managing agents, replacing these with transparent and fair handling fees.
  • Scrap the presumption that leaseholders pay their freeholders’ legal costs when challenging poor practice.

As the Act has not yet been published, it remains to be seen whether the devil is in fact in the detail.

More importantly, whether or not it will come into force in the version approved by the last parliament will be a matter for the new Government.

For more information and advice on the Leasehold & Freehold Reform Act, please contact Lucy Riley in our Commercial Property Team on 0345 646 0406 or fill in our online enquiry form for more information.