The Leasehold and Freehold Reform Act 2024 (“the Act”) marks a significant milestone in addressing longstanding concerns over leasehold ownership, tenant rights and the complexities of the housing market. Aiming to promote fairness, transparency and accessibility, this legislation introduces crucial reforms that impact both leaseholders and freeholders.
Key Provisions
- Ground rents have been abolished
- The lease extension process has been simplified
- Tenants have the right to manage their buildings
- Improved transparency of charges associated with leasehold ownership
- Existing leaseholders have been afforded protection from excessive service charges and unfair practices by freeholders
- Landlords and managing agents face additional regulation
Implications of the Reform
- Enhanced Rights for Leaseholders: The Act empowers leaseholders with greater control over their properties and reducing the financial burdens associated with leasehold ownership.
- Impact on Property Market: By abolishing ground rents and simplifying lease extensions, the Act may positively affect the property market with increased demand for leaseholds.
- Greater Accountability: Regulation of freeholders and managing agents is expected to foster a culture of accountability, resulting in better management and resolution of disputes.
- Long-Term Housing Policy: The Act aligns with broader housing policy objectives aimed at addressing affordability and accessibility in the housing market.
- Potential Challenges: While the reforms are largely positive, challenges may arise in the implementation phase ensuring compliance among freeholders and managing agents.
Future Reform
Whilst the provisions of the above Act will work their way into force through secondary legislation, further reform is anticipated after the King’s Speech set out the Government’s commitment to publish a Leasehold and Commonhold Reform Bill. This seeks to further strengthen the position of the tenant when extending their leases, managing their buildings and acquiring the freehold. It will also aim to reinvigorate commonhold tenure with a vision of it becoming the “default tenure” and remove the threat of forfeiture for non-compliance in residential leases.
Conclusion of the Leasehold and Freehold Reform Act 2024
The Act represents a transformative shift, addressing issues that have plagued leaseholders for decades. By promoting fairness, transparency, and accountability, it seeks to create a more equitable housing landscape that benefits homeowners and fosters community stability. It is clear from the King’s Speech that this is just the tip of the iceberg for the Government’s plans for reform across the property sector, especially with regards to improving the position for tenants. We will have to see what the new Government have in store over the 2024-25 parliamentary session.
Please contact our Real Estate team if you require any further information regarding the Leasehold and Freehold Reform Act 2024.