Leasehold and Reform Act

Posted on June 10th, 2024

Whilst the Renters (Reform) Bill did not complete its passage. The Leasehold and Reform Act is now law and will come into force. We will advise members when the Act comes into force.

What is included in the Act?

Once the Act is in force, the legislation aims to strengthen consumer rights by:

• 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.
• Making it easier for leaseholders to extend their lease or buy their freehold, and make standard lease extensions 990 years to reduce the need for repeated extensions.
• Excluding ‘marriage value’ when calculating the premium on lease extensions.
• Standardising the format of service charge demands so leaseholders have greater transparency about what they are being charged.
• Making it easier to access redress by requiring freeholders who manage their property to belong to a redress scheme. Currently only managing agents need to belong to a scheme.
• Removing the requirement to pay the freeholders cost when exercising their enfranchisement rights, making it easier to buy the freehold.
• Setting maximum time limits for providing home buying and selling information, and setting a maximum fee providing this information.
• Giving homeowners on private and mixed tenure estates comprehensive rights of redress, so they receive more information about what charges they pay, and the ability to challenge how reasonable they are.
• Scrapping the presumption that leaseholders pay their freeholders’ legal costs when challenging poor practice.
• Banning ‘opaque and excessive’ buildings insurance commissions for freeholders and managing agents, replacing these with transparent and fair handling fees.
• Removing the requirement for a new leaseholder to have owned their house or flat for two years before they can extend their lease or buy their freehold.

What is not included in the Act?

A cap on ground rents, this was not included.

In addition to this, new flats will remain leasehold by default. Initially, the Act was expected to make commonhold the default tenure for flats.

A number of amendments aimed at resolving the unfairness of the Building Safety Act were also not included.

Article Abridged from NRLA

https://www.gov.uk/government/news/leasehold-reforms-become-law