A vital step towards ending the nightmare for Leaseholders.

The sudden frenzy stirred up by the calling of a snap general election by Rishi Sunak on a wet & dreary day in May has led to many well intended and needed pieces of legislation falling by the way side.  Fortunately, amongst all the chaos, on 24^th May 2024 the Leasehold and Freehold Reform act officially became law.

It has been a noticeable trend of recent successive Governments to be hesitant to make changes to existing property Law that will benefit homeowners as opposed to those seeking to purchase a new property, the sole exception being the stamp duty holiday which benefitted all parties. 

Prior to the Leasehold and Freehold Reform act coming into force, existing and future Leaseholders were still under a harsh regime of costly expenses for entering into Lease Extensions, escalating Ground Rents and little to no ability to remove underperforming managing agents.  The main issues on the lips of ardent campaigners and members of the public were for the creation of greater consumer rights and protections to homeowners & tenants in the following areas: -

1. To ban and remove the ability for developers to purposely create new Leasehold houses.
2. Greater say and transparency in the formulation and costs of service charges.
3. To remove the costly marriage value on leasehold properties whereby the term of years left on the Lease is below 80 years.
4. Greater transparency on estate rent charges on new build estates.
5. To make the increase of the term of years within a standard Lease Extension 990 years for both houses & flats whereby the existing allowance was previously capped at 50 years for a house and 99 years for a flat respectively.
6. To make it easier and cheaper for owners of leasehold properties to take over the management of their building, especially where this an underperforming managing agent.
7. To remove the requirement for the owner of a leasehold property to have owned it for two years before they can extend the Lease or purchase the Freehold.

The passing of the act has achieved, what for many in the property profession  thought impossible, a paradigm shift of altering the balance of power from the Freeholders into the hands of Leaseholders throughout the country.  The new changes are: -

1. New Leasehold homes can now only be created in exceptional circumstances.
2. The act now forces Freeholders and management companies to issue bills in a standardised format.  In addition, a requirement for year-end reports to be distributed to the building owners with planned Section 20 or major works identified.
3. Abolition of the marriage value
4. Rights of redress and more information on estate rent charges being made available from the outset and the ability to challenge the reasonableness of said charges.
5. A standard Lease extension will now be 990 years irrespective of whether it is for a house or flat.
6. The act will now make it affordable and the process more straightforward for leaseholders to take over the management of their building.
7. The right of enfranchisement is now cheaper and, for the majority of cases, there will no longer be a requirement to pay the Freeholder’s costs.

It should be noted that the cap on Ground rents was not successful.

This should be a clarion call for all Leaseholders to urgently review or have their legal title reviewed and make enquiry with their Freeholder to action any required Lease extension, purchase of the Freehold title or takeover of their management company, if required.

For all of our clients, we welcome the changes made and are eager for the impending improvement in the livelihoods of the current homeowning and those yet to purchase members of the public.

If you have any questions about the changes made by the passing of the act, the conveyancing process or wish to get a quote for the costs involved, why not call our team at mosshaselhurst Solicitors on 01606 74301.