The Leasehold and Freehold Reform Act 2024 – Major Changes in the Law

The Leasehold and Freehold reform Act has finally received royal assent and became law on the 24^th May 2024. This is exciting news for both leaseholders and freeholders who pay estate charges.

The major goal of the new law is to make it cheaper and easier for leaseholders to extend their lease, buy their freehold and take over management of their building.

Key points from the new Leasehold and Freehold Reform Act 2024

Lease Extension Simplification and Cost Reduction

It will become cheaper and easier to extend your lease or buy the freehold for existing leaseholders in houses and flats. Marriage value will be removed from the lease premium calculation and there will be an online calculator which will be available to make it simpler for leaseholders to find out how much it will cost to buy the freehold or extend the lease.

Extension of Lease Term to 990 Years with Peppercorn Ground Rent

It will increase the standard lease extension term to 990 years for both houses and flats with a peppercorn ground rent. Currently, as a leaseholder, you can extend your lease by law up to 50 years in houses and 90 years in flats.

Removal of Two-Year Ownership Requirement for Lease Extension

Abolish the requirement for new leaseholders to have owned their house or flat for two years before they can extend their lease by law.

Improved Transparency in Service Charge Billing for Leaseholders

Giving leaseholders greater transparency over their service charges by making freeholders or managing agents issue bills in a standardised format that can be more easily scrutinised and challenged.

Enhanced Leaseholder Rights in Building Management

Making it easier and cheaper for leaseholders to take over management of their building, allowing them to appoint the managing agent of their choice and also exercise their enfranchisement rights as they will no longer have to pay their freeholder’s costs when making a claim.

Streamlined Process for Leaseholder Property Transactions

It will become easier and quicker for leaseholders buying or selling their leasehold property by setting a maximum time and fee for the provision of information to a leaseholder by the freeholder.

Equal Redress Rights for Freehold Homeowners on Estates

Grant freehold homeowners on private and mixed tenure estates the same rights of redress as leaseholders but not the Right to Manage.

Ban on Sale of New Leasehold Houses

Banning 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.

Enlarged Access to Redress Schemes for Leaseholders

Extend access to redress schemes for leaseholders to challenge poor practice. The government will require freeholders, who manage their building directly, to belong to a redress scheme so leaseholders can challenge them if needed – managing agents are already required to belong to a scheme.

However, it is important to note that the plans to remove ground rent for existing leaseholders or cap it at £250 have been dropped.

We would hope that the new law will make leasehold conveyancing and statutory lease extension process a lot easier and faster. 

It is important to note that there is currently no commencement date for the Act and this will be decided by the new government elected after the 4^th July 2024.

How we can assist

If you have a property or are considering buying one that has a short lease, you should always seek legal advice to ensure that you are fully aware of the implications.

Our property solicitors can assist if you are considering extending your lease or buying a property with a short lease. Contact our property team.