Unexpectedly, the Act passed into Law on 24th May 2024 as part of the “wash-up”. i.e. last-minute legislation before parliament closed down.
Most of the Act’s provisions are not yet in force but certain parts of the Act, dealing with amendments to the Building Safety Act 2022 and rentcharges are now in force.
But what about leasehold reform?
The Government has confirmed that it will look to implement the remainder of the Act. There is currently no timetable for implementation and the Act’s provisions may be implemented in stages.
Once implemented the Act will:
- Increase the standard lease extension length for both houses and flats to 990 years.
- Make it cheaper for leaseholders to extend their lease or exercise their collective enfranchisement rights via changes to the calculation of the price payable and provide that they will no longer have to pay their freeholder’s costs.
- Ban the sale of new leasehold houses (with certain exceptions).
- Remove the two-year ownership requirement before the right to extend a flat lease or buy the freehold of a house can be exercised.
- Change the qualification criteria for mixed use premises in enfranchisement and right to manage claims to increase the maximum for non-residential parts to 50%.
- Require that landlords take leases back of non-participating flats and non-qualifying areas of the building, including commercial areas, in enfranchisement claims.
- Make it easier for leaseholders to take over the management of their building and appoint a new manager/managing agent.
- Increase the transparency of service charges by making freeholders or managing agents issue bills in a standardised format that can be more easily scrutinised and challenged.
- Extend access to redress schemes for leaseholders to challenge poor practice.
- Make buying or selling a leasehold property quicker and easier by setting a maximum time and fee for the provision of home buying and selling information.
- Grant homeowners on private and mixed tenure estates comprehensive rights of redress, so they receive more information about what charges they pay, and the ability to challenge the reasonableness of those charges.
- Ban opaque and excessive buildings insurance commissions for freeholders and managing agents, replacing these with transparent and fair handling fees.
- Scrap the presumption that leaseholders pay their freeholders’ legal costs when challenging poor practice.
The Government has also indicated that draft legislation will be published on leasehold and commonhold reform which will bring into law the remaining Law Commission recommendations relating to:
- leasehold enfranchisement and the Right to Manage;
- tackling unregulated and unaffordable ground rents; and
- removing the disproportionate and draconian threat of forfeiture as a means of ensuring compliance with a lease agreement.
The Government has also indicated that it will take steps to:
- bring what it calls “the feudal leasehold system” to an end;
- reinvigorate commonhold through a comprehensive new legal framework; and
- ban the sale of new leasehold flats so commonhold becomes the default tenure.
We understand that the Government intends to publish its draft legislation on leasehold and commonhold reform in the 2024-25 parliamentary session, so that it may be subject to broad consultation and additional parliamentary scrutiny.
For more information on any of the above changes please contact Lucy Riley on 0345 646 0406 or complete an online enquiry form and she will be in touch.