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Leasehold and Freehold Reform Act 2024

Contents

Overview of the Act

  1. The Leasehold and Freehold Reform Act 2024 is the second part of a legislative package to reform English and Welsh property law. It follows on from the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for most new, qualifying long residential leasehold properties in England and Wales.
  2. The Act makes long-term changes to homeownership for millions of leaseholders and homeowners on managed estates in England and Wales. The main elements of the Act are:
  3. Empowering homeowners:
    1. Ban the sale of new leasehold houses so that - other than in exceptional circumstances - every new house in England and Wales is freehold from the outset.
    2. Making it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold.
    3. Increasing the standard lease extension term from 90 years to 990 years for both houses and flats, with ground rent reduced to a peppercorn.
    4. Removing the requirement for a new leaseholder to have owned their house for two years before they can extend their lease or buy their freehold and for flats before they can extend their lease.
    5. Increasing the 25 per cent ‘non-residential’ limit preventing leaseholders in buildings with a mixture of homes and other uses such as shops and offices, from buying their freehold or taking over management of their buildings - to allow leaseholders in buildings with up to 50 per cent non-residential floorspace to buy their freehold or take over its management.
  4. Improving consumer rights for leaseholders and homeowners on managed estates:
    1. Requiring greater transparency regarding leaseholders' service charges so that all leaseholders receive minimum key financial and non-financial information on a regular basis, including introducing a standardised service charge demand form and an annual report, so that leaseholders can scrutinise and better challenge costs if they are considered unreasonable.
    2. Replacing buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees.
    3. Scrapping the presumption for leaseholders to pay their landlords’ legal costs when challenging poor practice.
    4. Make buying or selling a leasehold property quicker and easier by setting a maximum time and fee for the provision of information required to make a sale to a leaseholder by their freeholder.
    5. Granting freehold homeowners on private and mixed tenure estates the same rights of redress as leaseholders – by extending equivalent rights to transparency over their estate charges and to challenge the charges they pay by taking a case to a Tribunal.
    6. Requiring freeholders who manage their property to belong to a redress scheme so leaseholders can challenge them if needed.
  5. Separately, the Act further protects leaseholders by extending the measures in the Building Safety Act 2022 to ensure it operates as intended.

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