The Leasehold and Freehold Reform Act 2024

Late on Friday (24 May) – in the final push by the Government to get as much legislation passed as possible before parliament came to a close in advance of the general election – the changes they were seeking to leasehold flats and houses were finally given Royal Assent.

Whilst going through parliament the Bill, which originally consisted of 65 clauses and 8 schedules became an Act consisting of 124 clauses and 13 schedules!

Notably, there is no change to ground rent. There had been plans to scrap or cap existing ground rents but these have not been included in the Act itself.

However, we now know the following is included:

1. Increase in the lease term on a lease extension to 990 years, an increase from the original 90 for flats and 50 for houses
2. Removing the presumption that leaseholders will pay their landlord’s costs in relation to statutory lease extensions and collective enfranchisement
3. Removing the requirement for leaseholders to have owned their property for two years before they are able to buy the freehold or extend their lease
4. Prohibition on the sale of new leasehold houses, except in exceptional circumstances
5. An overhaul of the valuation methodology for leasehold enfranchisement claims. The criteria for mixed use premises in enfranchisement has changed from 25% to 50% no residential
6. Banning excessive building insurance commissions for freeholders and managing agents
7. More regulation as to information being provided to tenants about the charges they pay and their ability to challenge them
8. Maximum timescales and fees for sales packs from managing agents and freeholders
9. Regulation of remedies for arrears of rent charges
10. Amendments to part 5 of the Building Safety Act 2022 including in relation to obligations on relevant landlords to maintain the safety of relevant buildings (which are at least 11m or five storeys high).

When will these provisions take effect?

Although the Act has now been passed we understand that parts of it will come into force at different times.

• The parts of the Act that amend the Building Safety Act 2022, and deal with rent charge arrears, we consider will come into force on 24 July 2024 (2 months after the Act was passed)
• The remainder of the Act (which includes the 990 year lease extension), will be brought into force by the Secretary of State making statutory instruments. We anticipate that these will come into effect in 2025-2026. However, with a general election looming it is not clear what the timing will be for the implementation of this Act.

See the Government’s announcement – here.

If you have any questions about the topics raised in this article, please get in touch.