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The Leasehold and Freehold Reform Bill 2024
The Leasehold and Freehold Reform Bill introduces several significant changes designed to improve conditions for leaseholders in England and Wales. These changes aim to make it easier and cheaper for leaseholders to extend their leases, purchase freeholds, and manage their properties.
Key Changes Beneficial to Leaseholders:
Extended Lease Terms: The bill increases the standard lease extension term to 990 years for both houses and flats, up from the previous 90 years for flats and 50 years for houses. Ground rent for these extended leases will be reduced to a peppercorn (essentially zero)
Abolishment of Marriage Value: The bill removes the so-called 'marriage value,' which makes extending leases more expensive as they near expiry. This change should significantly reduce the cost of lease extensions.
Removal of Ownership Period Requirement: The requirement that a new leaseholder own their property for two years before they can extend the lease or buy the freehold is removed. This means new leaseholders can take advantage of these rights immediately.
Increased Non-Residential Limit: The limit for non-residential space in a building eligible for collective enfranchisement is increased from 25% to 50%. This change allows more leaseholders in mixed-use buildings to buy their freehold or take over building management.
Service Charge Transparency: The bill mandates greater transparency over service charges, requiring landlords and managing agents to provide detailed, standardised billing information. This will help leaseholders scrutinise and challenge unreasonable charges more effectively.
Redress Schemes: Freeholders who manage properties must now belong to redress schemes, providing leaseholders with more avenues to challenge poor practices.
Legal Cost Rebalancing: Leaseholders will no longer be automatically liable for their freeholders' legal costs in disputes over service charges or other issues. This will encourage more leaseholders to challenge unfair practices without fearing prohibitive legal costs.
Ban on New Leasehold Houses: The bill bans the sale of new leasehold houses, ensuring that future houses are freehold from the outset. However, it does not abolish leaseholds for new flats, which some critics see as a missed opportunity.
Additional Reforms:
Fixed Service Charges Regulation: The regulation of fixed service charges is extended, and new requirements for annual reports and statements of account are introduced to improve financial transparency.
Buildings Insurance: The bill stops landlords and managing agents from adding excessive commissions to building insurance premiums, replacing these with transparent handling fees.
These reforms represent a significant shift towards empowering leaseholders, improving their rights, and making lease extension and freehold purchase more transparent and less financially burdensome. However, some critics argue that further steps, such as abolishing leasehold for all new flats, should be taken to modernise the housing market completely.