Leasehold & Freehold Reform Act 2024 becomes law
The Leasehold and Freehold Reform Act (LFRA 2024) became law after the Bill received Royal Assent on 24th May 2024. Leasehold properties make up nearly 20% of England’s housing stock. So, the impact of the reforms will be significant.
The reform Act makes long-term changes to home ownership. It brings more rights and protections for homeowners. In general, the changes benefit tenants rather than freeholders. There are new obligations for freeholders, landlords & managing agents. Staying up to date with the changes is essential.
Leasehold & Freehold Reforms
Among the changes in the Leasehold & Freehold Reform Act are:
Longer lease extension – The standard lease extension term increases to 990 years for both houses and flats. It was formerly 50 & 90 years respectively.
Right to freehold acquisition – It will be easier and cheaper for tenants to purchase freehold and landlord’s costs no longer payable by tenant.
Qualifying criteria removal – The 2-year ownership qualifying criteria before tenants can apply for a lease extension or to purchase the freehold has been removed.
Removal of ‘Marriage Value’ from the premium calculation and valuation methods. Marriage value is the difference between a leasehold property’s value before and after an 80-year lease is extended.
Prohibiting the sale of new leasehold properties – Purchasers will own the freehold to their new property from the outset.
Unreasonable service charges – The Act makes it easier for leaseholders to challenge unreasonable service charges.
Commercial floor space change – Tenants were not able to purchase the freehold or have the right to manage if the 25% of the building’s floor space was for commercial use. This threshold has now increased to 50%.
When does it all happen?
No dates have been given for the implementation of the changes. There are concerns that the Bill has been rushed through before the upcoming election. It is likely the Act will come under further scrutiny leading to further changes.
For advice on the detail of the Act, and the impact on existing or future lease extensions or freehold purchases, please contact one of Bird & Lovibond’s specialist Property or Landlord & Tenant team as appropriate.