The much-awaited Leasehold and Freehold Reform Act 2024 (the Act) received Royal Assent on Friday 24 May 2024 and was the final bill to be passed during the hurried wash up before the current Parliament was prorogued.
The Act has been designed to introduce new consumer rights for leaseholders and toughen existing rights by making the whole process of extending a lease or purchasing a freehold cheaper and easier for leaseholders.
The key provisions of the The Leasehold and Freehold Reform Act 2024 include:
- A ban on leasehold houses save for categories of permitted leases;
- The 2 year ownership prerequisite for lease extensions has been scrapped which will permit all leaseholders to extend their leases regardless of how long they have owned the property;
- An extended term of 990 years will be granted for all lease extensions regardless of whether the property is flat or a house (the current term is 90 years for a flat and 50 years for a house);
- A radical overhaul of the valuation methodology applied in leasehold enfranchisement claims including the abolition of marriage value, making it cheaper to extend a lease or purchase the freehold;
- An amendment to the qualification criteria for mixed use premises in enfranchisement and right to manage (RTM) claims from 25% to 50% non-residential parts which will allow more mixed-use buildings to qualify for enfranchisement and RTM;
- A requirement that landlords take leasebacks of non-participating flats and non-qualifying areas of the building, including commercial areas, in purchase of freehold claims which will again make the total purchase price cheaper for the group of participating leaseholders;
- A change in the treatment of costs’ recovery in most cases so that each party bears its own costs instead of the leaseholder paying all of the landlord’s costs;
- A ban on the often excessive buildings insurance commissions for landlords and their managing agents;
- Making it easier and cheaper for leaseholders to take over management of their building by allowing them to appoint a managing agent of their choice.
The Act is not yet in force which means that the above provisions are not yet available to leaseholders. The parts of the Act which deal with the amendments to the Building Safety Act 2022 and rent charge arrears (not discussed here) come into force on 24 July 2024.
The remainder of the Act will be brought into force by the Secretary of State via statutory instrument but that all depends on the next Government and their appetite to tackle this complex area of law. Much of the Leasehold Reform, Housing and Urban Development Act 1993 and the Leasehold and Commonhold Reform Act 2002 are still not in force and so there is no certainty as to when leaseholders can take advantage of the change in law. The current guidance is that many of the reforms could come into effect during 2025-2026.
For now, all that leaseholders can do is continue to wait for the provisions to be made law and in the meantime, ensure that their own individual lease or freehold is as protected as it can be by obtaining bespoke advice from leasehold enfranchisement professionals.
