Leasehold and Freehold Reform Act 2024
The Leasehold and Freehold Reform Act 2024 restricts ground rents, makes lease extension and freehold enfranchisement cheaper and easier, and bans new leasehold houses.
Who is affected: Leaseholders, freeholders, and property developers in England and Wales
What Changed
The Leasehold and Freehold Reform Act 2024 bans the creation of new leasehold houses (save for very limited exceptions), meaning new houses must be sold on a freehold basis. It increases the standard lease extension term from 90 to 990 years for both flats and houses and removes the requirement to have owned the property for two years before extending. The Act reduces the 'marriage value' premium payable on lease extensions and enfranchisement claims, and caps non-litigation costs that freeholders can recover from leaseholders in service charge disputes. It strengthens leaseholders' rights to challenge service charges and improves transparency around insurance commissions. Section 21 of the Landlord and Tenant Act 1985 is amended to allow leaseholders to seek information from their landlord about service charge management.
What To Do
Leaseholders who wish to extend their lease or purchase the freehold should seek a formal valuation now that the two-year ownership requirement has been removed and premium calculations have changed. Freeholders and developers should review their standard practices as new-build leasehold houses are now prohibited. Leaseholders disputing service charges should note the updated cap on costs recoverable by landlords before the First-tier Tribunal (Property Chamber).