Changes to law: Leasehold & Freehold Reform Act 2024
What Is the Leasehold & Freehold Reform Act 2024
The Leasehold and Freehold Reform Act became law on 24 May 2024 and this affects both leaseholders and freeholders who pay estate charges.
The new law aims to make it cheaper and simpler for leaseholders to extend their lease, buy the freehold, or take over management of their building.
What You Need to Know from the New Leasehold & Freehold Reform Act 2024
#1 Lease Extension Simplification and Cost Reduction
Simply put, extending a lease or buying the freehold will be cheaper and more straightforward for existing leaseholders in houses and flats.
Marriage value will no longer be included in the lease premium calculation, an online calculator will help leaseholders estimate the cost of buying the freehold or extending the lease.
#2 Extension of Lease Term to 990 Years with Peppercorn Ground Rent
The standard lease extension term will increase to 990 years for both houses and flats, with a peppercorn ground rent. At present, leaseholders can extend by up to 50 years for houses and 90 years for flats.
#3 Removal of Two-Year Ownership Requirement for Lease Extension
Great news for new leaseholders, as they will no longer need to own their house or flat for two years before being able to extend their lease by law.
#4 Improved Transparency in Service Charge Billing for Leaseholders
This level of transparency translates to new ways of bill management. For example, 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.
#5 Enhanced Leaseholder Rights in Building Management
Making it easier and cheaper for leaseholders toIt will be easier and less costly for leaseholders to take over management of their building.
Leaseholders can appoint a managing agent of their choice and exercise enfranchisement rights without paying the freeholder’s costs when making a claim.
#6 Streamlined Process for Leaseholder Property Transactions
Now, buying or selling a leasehold property will be easier and quicker.
There will be a maximum time and fee for the freeholder to provide information to the leaseholder.
#7 Equal Redress Rights for Freehold Homeowners on Estates
Freehold homeowners on private and mixed tenure estates will have the same rights of redress as leaseholders, but not the Right to Manage.
#8 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.
#10 Redress Schemes for Leaseholders
Leaseholders will have wider access to redress schemes to challenge poor practice.
Freeholders who manage their building directly must join a redress scheme, managing agents are already required to do so.
Plans to remove ground rent for existing leaseholders or cap it at £250 will not go ahead.
Before you go….
The new law should make leasehold conveyancing and the statutory lease extension process easier and faster. It is important to note however, that there is currently no commencement date for the Act and this will be decided by the new government elected after the 4th July 2024.
How Orwins can help…
If you own or are considering buying a property with a short lease, seek legal advice to understand the implications.
Our property solicitors can help if you are considering extending your lease or buying a property with a short lease, contact our property team for advice.
