Key Leasehold Reforms in the UK: What You Need to Know for 2024

The Leasehold and Freehold Reform Act 2024 brings transformative changes to the leasehold system in the UK, providing significant benefits and protections for leaseholders. Here’s a detailed look at the key reforms and what they mean for homeowners.

1. Extended Lease Terms

One of the most impactful changes is the ability for leaseholders to extend their leases by up to 990 years, with ground rent reduced to a nominal “peppercorn” rent. This eliminates the hassle and cost of repeated lease extensions and offers long-term security.

2. Abolition of Marriage Value

The removal of the “marriage value” cost, which previously made it expensive to extend leases below 80 years, significantly reduces the premium payable for lease extensions. This is especially beneficial for those with shorter leases​.

3. Simplified Freehold Purchase

The Act removes the requirement for leaseholders to have owned their property for two years before being eligible to buy their freehold. This change makes it easier and quicker for leaseholders to gain full ownership of their homes​.

4. Increased Transparency and Rights

Leaseholders will now receive bills for service charges in a standardised format, making it easier to scrutinise and challenge these charges. Additionally, freeholders and managing agents must belong to redress schemes, providing leaseholders with avenues to challenge poor practices and unfair charges​.

5. Reforms for Mixed-Use Buildings

The percentage of non-residential floor space allowable for leaseholders to take over management or buy the freehold has increased from 25% to 50%. This change enables more mixed-use buildings to qualify for these rights.

6. Ban on New Leasehold Houses

The sale of new leasehold houses is largely banned, ensuring that most new houses will be freehold from the outset. This is a significant step towards fairer homeownership.

7. Legal and Cost Reforms

Leaseholders will no longer be presumed to pay their freeholders’ legal costs in disputes, and buildings insurance commissions will be replaced with transparent administration fees. These changes aim to make the process fairer and less costly for leaseholders.

Implementation and Future Steps

While the Act has been passed, its provisions will come into effect as secondary legislation is introduced. Specific rates and detailed implementation plans are still pending and will be clarified in the coming months​.

What Should Leaseholders Do Now?

Leaseholders considering extending their leases or purchasing their freehold should seek specialist advice to understand the best course of action given these upcoming changes. For those with leases below 80 years, it may be advantageous to wait for these reforms to take full effect​.

Conclusion

The Leasehold and Freehold Reform Act 2024 marks a significant step towards fairer and more transparent homeownership for millions of leaseholders in the UK. By understanding these changes and how they apply to your situation, you can make informed decisions about your property. If you require more information, please get in touch.