The Leasehold and Freehold Reform Act 2024: What It Means for Leaseholders

At Stewarts Estates, we understand the complexities of property ownership and management. The Leasehold and Freehold Reform Act 2024, enacted in May 2024, marks a significant step towards empowering leaseholders and ensuring fairer property ownership. This landmark legislation introduces pivotal changes aimed at enhancing leaseholder rights, simplifying processes, and fostering transparency. Here, we provide a detailed breakdown of the Act and its implications for property owners.

1. Extended Lease Terms

The Act has extended lease terms for leaseholders of houses and flats. Leaseholders can now secure a 990-year extension, compared to the previous terms of 50 years for houses and 90 years for flats. Additionally, the Act ensures that ground rent is reduced to a "peppercorn," effectively eliminating ongoing ground rent payments.

This provision delivers greater security and financial predictability for leaseholders, allowing them to enjoy long-term ownership without the burden of escalating ground rents.

2. Simplified Lease Extension and Freehold Purchase

Historically, leaseholders faced hurdles such as needing to own their property for a specific period before being eligible to extend the lease or purchase the freehold. The new Act abolishes these restrictions, enabling immediate action upon acquiring a leasehold property.

This reform removes unnecessary barriers, making property ownership more accessible and equitable.

3. Increased Transparency in Service Charges

Transparency in service charges is a cornerstone of the Act. Managing agents and freeholders are now required to issue standardised bills. These measures are designed to simplify scrutiny and allow leaseholders to challenge charges more effectively if necessary.

By mandating transparency, the Act aims to create a more balanced relationship between leaseholders and managing agents.

4. Facilitating the Right to Manage

The Act simplifies and reduces the costs associated with the Right-to-manage (RTM) process. This change allows leaseholders to take control of their building's management more easily, including appointing their preferred managing agents.

This provision puts leaseholders at the helm of their property's future.

5. Abolition of Leasehold for New Properties

While not yet implemented, the government has announced plans to replace the leasehold system entirely with commonhold for all new flats. This system allows property owners to have outright ownership of their flats and a shared stake in the building.

This transition to commonhold ensures a fairer and more straightforward tenure system.

Challenges and Ongoing Developments

Despite its ambitious goals, the Act's implementation has faced delays. Legal challenges, such as the case brought by Annington Property against the UK government, have raised concerns about the financial impact on property values.

Moreover, the timeline for implementing specific reforms remains unclear. Leaseholder advocacy groups continue to push for clarity and urgency in rolling out these changes.

What This Means for You

At Stewarts Estates, we recommend that leaseholders familiarise themselves with the new provisions and seek professional advice to maximise the benefits of these reforms. Whether you're looking to extend your lease, purchase a freehold, or take over building management, the changes introduced by the Act provide significant opportunities to enhance your property rights.

For personalised guidance on navigating these reforms, contact Stewarts Estates today. Our team of experts is here to assist you every step of the way.