Please note that this News item is not maintained, and reflects the law as at the date of publication or update.
The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. The aim of the Act is to improve the rights of long residential leaseholders by:
- Banning the grant of long leaseholds for houses
- Amending the law in relation to lease extensions and enfranchisement
- Extending the Right to Manage
- Regulating the remedies available for historic rentcharges
- Increasing rights for lessees in relation to service charges and estate management
Although the Act has received Royal Assent many of the provisions have not yet been implemented, leaving many questions as to when and to what extent the law will change and what final effect it will have. Originally it was anticipated that the Act’s provisions would not be considered until late 2025 or 2026. The effect of this delay has created a state of limbo leading to affected leaseholders and freeholders being unsure as to how to proceed with potential claims.
On 21 November 2024 the government issued a statement giving some guidance on when further implementation can be expected. It is widely understood that for the Act to operate properly further legislation will be required. It has been stated that implementation will take place in stages, with the first major step being made in January 2025.
At present, lessees are not able to proceed with a lease extension claim unless they have legally owned an interest in a qualifying property for at least 2 years. It is anticipated that this requirement will be removed in January 2025. This will benefit many lessees and ease the additional strain in some leasehold sales where the benefit of the right to a lease extension needed to be assigned on the completion of the sale. This will be a welcome amendment to many conveyancers and lessees who can fall foul of the current legislation and difficult service and assignment provisions.
Further amendments will then be subject to consultations. One of the most eagerly awaited consultations for lessees is that of the matter of valuations of leasehold interests for the purpose of extensions and enfranchisements. It is anticipated that the consultation will clarify the basis of valuations and will deal with the eradication of ‘marriage value’.
The issue of high ground rents in leases will also be addressed. A standalone right to reduce ground rent without the need for a lessee to simultaneously apply for a lease extension will be introduced. This issue is something which has, certainly in the past couple of years, had a significant effect on sales and mortgages of leasehold properties and which, once implemented, should ease the pressure within conveyancing transactions.
For more information, please contact Melanie Verth.
