New Leasehold Reforms Receive Royal Assent

The Leasehold and Freehold Reform Act 2024 received royal assent at the end of May, introducing a raft of provisions designed to give homeowners more rights, power, and protections over their homes under the law. 

The new Act provides more security for leaseholders in various ways. Most notably, it increases the standard lease extension term for houses and flats to 990 years (up from 90 years in flats and 50 in houses), allowing leaseholders to secure extensions at a nominal ground rent. 

The Leasehold Reform Act also removes the ‘marriage value’ for leasehold extensions, which made it more expensive to extend leases with a term of less than 80 years remaining.  

Under the new Act, leaseholders can purchase their freehold immediately upon acquiring a property, abolishing the previous ownership qualifying condition that imposed a two-year waiting period. 

Provisions of Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act contains provisions that will: 

• Allow leaseholders in buildings with up to 50% non-residential floorspace to buy their freehold or take over the building’s management (currently, leaseholders in mixed-use buildings where more than 25% of the floor space is non-residential are unable to collectively enfranchise the freehold or exercise a right to manage). 
• Make buying or selling a leasehold property quicker and easier by setting a maximum time and fee for the provision of information required to make a sale (such as building insurance or financial records) to a leaseholder by their freeholder. 
• Require transparency over leaseholders’ service charges. 
• Replace buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees. 
• Extend access to redress schemes for leaseholders to contest poor practice and scrap the presumption for leaseholders to pay their freeholders’ legal costs when making a challenge. 
• Grant freehold homeowners on private and mixed tenure estates the same rights of redress as leaseholders by extending equivalent rights to transparency over their estate charges and to challenge the charges they pay by taking a case to a tribunal. 
• Ban the sale of new leasehold houses so that, other than in exceptional circumstances, every new house in England and Wales will be freehold from the outset. 

No Ban on Ground Rent 

While the Leasehold and Freehold Reform Act 2024 contains measures that should make it quicker and easier for leaseholders to extend their leases, there are several key omissions, and it has faced criticism from some for not going far enough. 

Despite rumours that the legislation would ban existing ground rents, or introduce a £250 cap, the Act does not include provision to remove ground rent in existing leases. Banning forfeiture of long residential leases is also not covered by the Act. 

The Leasehold and Freehold Reform Act 2024 is a complex piece of legislation.  

If you have any questions about the reforms, or are a leaseholder and want to know more about the enfranchisement process, please get in touch with Russell & Russell Solicitors. You can call us on 0800 103 2600 or make an online enquiry.