Leasehold and Freehold Reform Act 2024

The UK Government’s unexpected decision to call for a general election on 4 July 2024 came as a surprise to many throughout the country.

That decision had put enormous pressure on the parliament to pass any outstanding Bills that were pending, before the dissolution of the parliament on 24 May 2024.

The Leasehold and Freehold Reform Bill, which was on the cards for quite a while was intended to protect home ownership for leaseholders. This was one of the Bills debated in the House of Lords and received Royal Assent on 24 May 2024, becoming the Leasehold and Freehold Reform Act.

The Act will have a significant impact on leaseholders who own residential properties in England and Wales.

Key Changes

The changes under the Act include:

• The act allows for a leaseholder to follow an easier and cost-effective process to extend their residential lease or buy the freehold (if they qualify and could exercise their enfranchisement rights) so that leaseholders pay less and at the same time have more security for their home.
• The standard lease extension term is now increased to 990 years for houses and flats from the current 50 years for houses and 90 years respectively, removing the inconvenience and expense for leaseholders of future lease extensions.
• The requirement for a leaseholder to have owned their house or flat for 2 years before they get a right to extend their lease or buy their freehold has been abolished.
• The leaseholders will have more of a say in relation to how much service charges they have to pay and the freeholders or managing agents will need to follow a transparent process of issuing bills in a format that can be easily scrutinised and challenged.
• Any barriers for leaseholders to challenge their landlords’ unreasonable charges at a tribunal have been removed. 
• It is now easier and cheaper for leaseholders to take over management of their building, allowing them to appoint the managing agent of their choice.
• Sale of new leasehold houses have been banned (other than exceptional reasons) and every new house in England and Wales should be sold as a freehold.

We still do not have a date as to when these reforms will come into force, but it will be one of the important decisions for the new government that will be voted to power on 4^th July 2024.