Leasehold Reform: Law Changes And What's Next

The Leasehold and Freehold Reform Act 2024 became law in May 2024, but it has not yet come into force. The Act will strengthen leaseholders' rights by making it cheaper and easier to extend leases and buy freeholds, increasing the standard lease extension term to 990 years, banning the granting of new leasehold houses, improving transparency of service charges, and more. However, there is no fixed timeline for when the Act will come into force, with some sources suggesting it could be as late as 2026 or beyond.

Leaseholders will find it easier and cheaper to extend their lease or buy their freehold

The Leasehold and Freehold Reform Act 2024 will make it easier and cheaper for leaseholders to extend their lease or buy their freehold.

The Act will increase the standard lease extension term to 990 years for both houses and flats, up from 50 years for houses and 90 years for flats. This will allow leaseholders to enjoy secure ownership without the hassle and expense of future lease extensions. Leaseholders will also no longer have to pay their freeholder's costs when extending their lease, making this process cheaper.

The Act will also remove the requirement for a new leaseholder to have owned their house or flat for two years before they can extend their lease or buy their freehold. This will give new leaseholders greater flexibility and security.

In addition, the Act will improve the transparency of service charges, making it easier for leaseholders to understand and challenge these charges. It will also extend access to redress schemes, allowing leaseholders to challenge poor practice more effectively.

Overall, the Leasehold and Freehold Reform Act 2024 will provide leaseholders with greater rights, powers, and protections over their homes, making it easier and cheaper for them to extend their lease or buy their freehold.

Leaseholders will be able to extend their lease to 990 years

The Leasehold and Freehold Reform Act 2024 will make it possible for leaseholders to extend their lease to 990 years. This is a significant increase from the previous limit of 90 years for flats and 50 years for houses. The new legislation will also reduce ground rent to zero, meaning leaseholders will no longer pay any ground rent to the freeholder.

The changes are part of the biggest reforms to English property law in 40 years, aiming to make home ownership fairer and more secure. The previous system often resulted in high ground rents and increased costs when buying or selling a property. Leaseholders could also face high charges to extend their leases, with freeholders entitled to charge hefty premiums.

The new legislation will save leaseholders thousands to tens of thousands of pounds and provide greater security for homeowners. It is worth noting that the Act has not yet come into force, and the Labour government has stated that full implementation will take years. The government has also acknowledged that there are serious flaws in the Act that need to be addressed through additional legislation.

The cost of extending a lease to 990 years is a concern for some leaseholders. While the Housing Secretary, Robert Jenrick, has stated that there will be a fair and simple new formula, it is unclear if this will be affordable for all leaseholders. Additionally, there is a possibility that the cost of extending a lease could increase for some leaseholders, particularly those with leases above 80 years or with low ground rent.

The Leasehold and Freehold Reform Act 2024 is a significant step towards providing leaseholders with greater rights and protections. However, it is important to note that the full impact of the changes will not be felt until the legislation comes into force and the various issues are addressed.

Leaseholders will have greater transparency over their service charges

The Act will also grant leaseholders the right to request information about service charges and the management of their building. This will empower leaseholders to make informed decisions and ensure they are being charged fairly. It will also enable them to hold their landlords accountable and challenge any unreasonable charges in the Tribunal.

The reform will bring about greater transparency in the management of leasehold properties, giving leaseholders a clearer understanding of their rights and obligations. This will help leaseholders better manage their finances and ensure they are not being taken advantage of by unfair practices.

Additionally, the Act will require freeholders who manage their buildings directly to join a redress scheme. This will provide leaseholders with an avenue to raise concerns and seek resolution if they feel their landlords are not meeting their obligations.

The implementation of these measures will provide leaseholders with greater visibility and control over their service charges, enabling them to effectively exercise their rights and protect their interests.

While the Act has received Royal Assent, it is not yet in force. The Labour government has committed to implementing the Act as soon as possible, with the Housing Minister, Matthew Pennycook, stating their intention to act quickly. However, there may be delays as the Act requires further secondary legislation and consultations to address identified flaws.

Leaseholders can expect greater transparency over their service charges once the Act is fully implemented, likely in 2025 or 2026. This will bring about a welcome change, empowering leaseholders and ensuring fair practices in the management of their properties.

Leaseholders will find it easier to take over the management of their building

The Leasehold and Freehold Reform Act 2024 will make it easier for leaseholders to take over the management of their building. The Act, which received Royal Assent on 24 May 2024, will give leaseholders greater powers to take over the management of their building without having to prove bad management. Leaseholders will be able to nominate a Right to Manage (RTM) company to take over management functions from the landlord.

The RTM company will become responsible for the management of the building and will have duties and liabilities, such as collecting service charges and dealing with the upkeep of communal areas and the structure of the building. Leaseholders will need to form an RTM company and register it at Companies House. The RTM company will need to include a minimum number of leaseholders, and all qualifying leaseholders are entitled to become members.

The process for transferring management functions to an RTM company is relatively simple and does not require the landlord's consent or a court order. Leaseholders will need to serve a formal notice on the landlord, after which management will transfer to the RTM company. The landlord will also be entitled to membership of the RTM company.

It is important to note that taking over the management of the building will bring additional responsibilities for leaseholders. They will need to learn about company procedures, find people to serve as officers of the RTM company, and deal with technical matters such as budgets, accounts, and legal requirements.

Overall, the Leasehold and Freehold Reform Act 2024 will empower leaseholders to have greater control over the management of their building and will provide a more direct way to address issues with the current management.

Leaseholders will find it cheaper to exercise their enfranchisement rights

The Leasehold and Freehold Reform Act has become law, strengthening existing consumer rights and introducing new ones for leaseholders. One of the key benefits of the Act for leaseholders is that it will make it cheaper for them to exercise their enfranchisement rights.

Previously, leaseholders had to pay their freeholder's costs when making a claim, but under the new Act, this is no longer the case. This change will make a significant difference in the cost of exercising enfranchisement rights, as these costs could be substantial. Now, leaseholders will have greater control over their properties and will not be burdened by having to cover the freeholder's expenses.

In addition to reducing costs, the Act also simplifies the process of exercising enfranchisement rights. Leaseholders will no longer have to navigate complex and costly procedures, making it easier for them to take control of their properties. This is especially beneficial for those who may have been deterred by the previous complex and expensive process.

The Act also introduces other benefits for leaseholders, such as increasing the standard lease extension term to 990 years for houses and flats, providing greater transparency over service charges, and removing barriers for leaseholders to challenge unreasonable charges at a tribunal. These changes empower leaseholders by giving them more security, transparency, and protection over their homes.

While the Act has become law, it is important to note that it has not yet come into force. The government has outlined a timeline for implementing various provisions, with some changes taking effect in January 2025, Spring 2025, and Summer 2025. Leaseholders will need to stay updated with this timeline to understand when they can fully exercise their rights under the new Act.

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