The Key Provisions of the Leasehold and Freehold Reform Act 2024

Posted Monday 3rd June 2024

On 24 May 2024, the Leasehold and Freehold Reform Act 2024 received Royal Assent and became the final bill to be passed before the discontinuation of the current Parliament.

The intention behind the Act is to strengthen the rights of leaseholders; simplifying processes in which a leaseholder extends a lease or purchases a freehold.

The key provisions of the Act are:

• Leaseholders are entitled on the immediate purchase of their property to extend their lease or purchase their freehold. The Act removes the necessity of owning the property for 2 years before doing so.
• All leasehold extensions shall be extended for a term of 990 years, irrespective of whether the property is a flat or a house (the current term extensions are 90 years for a flat and 50 years for a house).
• The limit to which floor space within a building can be “non-residential” has been raised from 25% up to 50% for the purposes of leasehold enfranchisement or Right to Manage, allowing more mixed-use buildings to qualify.
• An outright ban on leasehold houses, save for exceptional circumstances. This means any sale of a house within England and Wales shall only be freehold.
• The abolition of ‘marriage value’, making it cheaper and easier for a leaseholder to extend their lease.
• Service charges are to be demanded in a standardised form, allowing leaseholders greater scrutiny to challenge costs.
• An allowance to leaseholders to appoint a managing agent of their own choosing, in a bid to make easier and cheaper how leaseholders take over management of their building.

Perhaps, just as important, are the proposed changes that were ultimately not included. The proposed abolishment on ground rent payments or to cap them at £250 had been a heavily campaigned point but does not form part of this Act.

It is important to note that the Act is not yet in force. The only confirmed aspects of the Act which amend the Building Safety Act 2022 become law on 24 July 2024. The remainder of the Act, with the key provisions set out above, will be dealt with by the Secretary of State via statutory instrument. The immediacy of which will depend on the next government and their inclination to proceed with traversing this area of law. There is no proposed timeline, though most guidance suggests the remainder of the Act will come into effect in 2025-2026.

Therefore, leaseholders must simply bide their time and wait for these provisions of the Act to take effect. Should you require any assistance in taking appropriate steps to safeguard your leasehold or freehold in the interim, you should contact our Property Litigation team for further advice.

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This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.

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