The Leasehold and Freehold Reform Act, now officially law (24th May 2024), introduces significant changes to empower homeowners and leaseholders with greater rights and protections.
UPDATE: ALTHOUGH IT HAS BECOME LAW BUT MANY LEASEHOLDER IN THE UK POINT IT OUT THAT IT STILL NEED SECANDARY LEGISLATION TO BE PASSED BEFORE BECOME EFFECTIVE. THANK YOU TO LEASEHOLDERS AS NOTHING SUCH MENTIONED ON THE UK GOVT WEBSITE SOURCE.
One of the most notable reforms is making it easier and cheaper for leaseholders to buy their freehold or extend their lease, with lease extensions now standardized to 990 years for both houses and flats. This eliminates the need for repeated extensions, offering long-term security.
The Act also increases transparency around service charges, requiring freeholders and managing agents to issue bills in a standardized format, making it easier for leaseholders to scrutinize and challenge unreasonable costs. Additionally, it removes the barrier that previously required leaseholders to wait two years before they could buy their freehold or extend their lease.
For leaseholders wanting more control over their properties, the Act lowers the threshold for taking over the management of buildings, increasing the commercial space limit from 25% to 50%. This change will enable more leaseholders in mixed-use buildings to exercise the Right to Manage or collective enfranchisement.
Moreover, the Act bans the sale of new leasehold houses in most cases, ensuring that future homes are freehold by default. It also addresses the issue of excessive building insurance commissions by mandating transparency and fairness in these charges.
The Act will further benefit leaseholders by:
Scrapping the presumption that leaseholders pay their freeholders’ legal costs when challenging poor practice currently acts as a deterrent when leaseholders want to challenge their service charges. (NOTE: It is not yet clear if we will be exempt from our Landlord’s legal cost in case if our lease says that we shall be responsible for the cost of landlord’s legal fee ?)
Banning opaque and excessive buildings insurance commissions for freeholders and managing agents, replacing these with transparent and fair handling fees.
Overall, this legislation marks a major step forward in leveling the playing field for leaseholders, offering them stronger protections and more control over their homes.
For detailed information on the The Leasehold and Freehold Reform Act, please refer to the UK govt website.
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