The Leasehold and Freehold Reform Act 2024
The Leasehold and Freehold Reform Act 2024 (LFRA) became law on the 24th May 2024; however, the actual reforms will not be applied until the Act is implemented, and that will be the decision of whichever party is elected on 4th July and subject to secondary legislation that will provide the detail.
The LFRA 2024 aims to improve the rights of residential leaseholders of houses and flats in England and Wales by:
- Banning the grant of long residential leases of houses unless they are within a permitted exception.
- Increasing the rights of residential leaseholders regarding service charges, insurance, administration charges and the provision of sales information on assignment, and reducing liability to pay litigation costs.
- Substantively amending the law relating to leasehold enfranchisement and lease extensions of both houses and flats and extending the right to manage (RTM).
Such amendments include:
- increasing the standard lease extension term to 990 years for houses and flats (up from 50 years in houses and 90 years in flats)
- removing the bar preventing leaseholders from taking over the management of a site or buying their freehold if more than 25% of the floor space is non-residential; the limit has now been increased to 50% to enable more leaseholders to access RTM or the right to a collective enfranchisement.
- removing the requirement for a leaseholder to have owned their house or flat for two years before they can extend their lease or buy their freehold.
- removal of the ‘Marriage Value’ from the lease extension calculation of the premium, potentially making it cheaper, along with the removal of the requirement for the leaseholder to pay freeholder costs to undertake this work.
In summary the Act will make it easier for Leaseholders to buy their freehold or extend their lease by increasing lease extension terms. Leaseholders will have greater transparency of their service charges, as managing agents will have to issue bills in a standardised format. The Act will also remove barriers for Leaseholders to challenge unreasonable charges at Tribunal.
The Act will end excessive building insurance commissions for Freeholders and managing agents. And it will reverse the requirement for new Leaseholders to have owned their property for two years before they can buy or extend their lease.
The new powers will also grant Freehold owners on private and mixed tenure estates the same right of redress as Leaseholders and the same rights to transparency over estate charges.
