News

Categories

Previous News

Image

Leasehold Reform Latest News

Added by Berlad Graham
 - 
July 1, 2024

Share this Post

The Leasehold and Freehold Reform Act 2024 received royal assent at the end of May, one of the final Bills to be passed by the House of Lords before parliament was dissolved ahead of the upcoming general election.

In this blog, our specialist Leasehold Solicitors consider the legislation and its likely impact on homeowners in England and Wales.

What is the Leasehold Reform Act 2024?

The Leasehold and Freehold Reform Act 2024 is the second part of a legislative package to give homeowners more rights, power, and protection under the law by reforming the rules relating to leasehold properties in England and Wales.

It implements various Conservative Party commitments to “improve consumer choice and fairness in leasehold” and “crack down on unfair practices in leasehold”, and takes forward many of the leasehold reform recommendations made in 2020 by the Law Commission.

The Act follows on from the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for most new residential leasehold properties in England and Wales.

What is the difference between leasehold and freehold?

In England and Wales there are two main types of property ownership:

  1. Freehold.
  2. Leasehold.

If you own a property on a freehold basis, you own the building and the land on which it stands forever and are responsible for the maintenance and upkeep of both. Houses are usually freehold.

However, owners of leasehold properties only own the property for a set period of time, which is specified in a lease agreement with their landlord, and do not own the land the property stands on. In England and Wales, flats and maisonettes are usually leasehold.

Landlords of leasehold properties are usually responsible for the maintenance of communal areas, such as gardens and hallways, for which leaseholders must pay a service charge, in addition to ground rent.

Why was leasehold reform necessary?

Leaseholders don’t enjoy the same security, freedom and protections as owners of properties that are freehold.

Owners of leasehold properties often face big service charges, soaring ground rents and lack decision-making power over many aspects affecting their property, for example usually having to seek a landlord’s permission as to whether they may keep pets, are allowed to sublet their property or can run a business from home.

The process involved in extending a lease on a leasehold property (known as enfranchisement) has also been criticised for being outdated, with leaseholders being responsible for excessive costs.

Remortgaging a property with a short lease can prove problematic, and leasehold properties can be harder to sell.

If you are an existing leaseholder and need some legal advice, or you are considering buying a leasehold property and want to know more about the changes likely to be introduced by the Leasehold and Reform Act, get in touch with Berlad Graham LLP.

Our specialist residential property solicitors have extensive experience advising leaseholders in Uxbridge, Cumbria and across other parts of England and Wales with legal issues associated with leasehold properties, including lease extensions and collective enfranchisement.

To speak to one of our leasehold specialists, call us now on 0330 175 5655 or email info@bglaw.co.uk.

What are the new rules on leasehold properties in England and Wales?

The Leasehold Act strengthens existing, and introduces new, consumer rights for homeowners in various ways, including by:

  • Making it cheaper and easier for people to extend their lease or buy their freehold.
  • Increasing the standard lease extension term to 990 years for houses and flats (up from 50 years for houses and 90 years for flats).
  • Giving leaseholders greater transparency over their service charges by making landlords and managing agents issue bills in a standardised format so that they can be more easily scrutinised and challenged.
  • Making it easier and cheaper for leaseholders to take over the management of their building, allowing them to appoint managing agents of their choice.
  • Making it cheaper for leaseholders to exercise their enfranchisement rights as they will no longer have to pay their freeholder’s costs when making a claim.
  • Extending access to redress schemes for leaseholders to be able to challenge poor practice.
  • Making buying or selling a leasehold property quicker and easier by setting a maximum time and fee for home buying and selling information.
  • Granting homeowners on private and mixed tenure estates comprehensive rights of redress.

The Act also:

  • Extinguishes the presumption that leaseholders should pay their freeholders’ legal costs when challenging poor practice.
  • Bans opaque and excessive building insurance commissions for landlords and managing agents.
  • Abolishes 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.
  • Removes the requirement for a new leaseholder to have owned their flat for two years before they may apply to extend their lease or to have owned their house for two years before they may apply to buy their freehold.

Read more here.

Will leasehold reform happen in 2024?

Although the Leasehold and Reform Act received royal assent on 24 May 2024, it is not yet in force, and various secondary legislation needs to be passed before it can take effect.

Exactly when the reforms will be implemented depends on the results of the general election. However, as all the major parties have expressed a commitment to leasehold reform, it is anticipated that the changes will be rolled out over the next two years.

Does leasehold reform affect existing leaseholders?

Yes, the Leasehold Reform Act affects both new and existing leases and will apply to all leaseholders in England and Wales.

Leasehold Solicitors Near Me

At Berlad Graham LLP, our experienced team of property solicitors have been helping freeholders and leaseholders with their legal issues for many years.

The purchase by lessees of the freehold of their block of flats, statutory lease extensions and the acquisition by lessees of the right to manage all require navigation by specialist solicitors.

Our team have detailed expertise in collective enfranchisement, gained over many years of acting for landlords and tenants, and will be happy to guide you through these difficult processes.

If you are looking for a specialist leasehold solicitor to help you with enfranchisement issues, or want to know how the Leasehold and Reform Act 2024 might affect you, our experienced team can help.

To speak to one of our property solicitors, call 0330 175 5655 or email info@bglaw.co.uk.