Progression of the Leasehold and Freehold Reform Act 2024 (“The Act”) : November 2024

Specialist lease extension solicitor, Callie Tuplin, takes a look at the announcement yesterday regarding the future of the Leasehold and Freehold Reform Act 2024.

The Leasehold and Freehold Reform Act 2024 received Royal Assent during the wash-up before the dissolution of the last Parliament in May 2024. However, very few sections were implemented in July and October and these only relate to:

• Building safety and the associated legal costs
• The work of professional insolvency practitioners
• Removing the remedy where homeowners risk losing their home because of failure to pay a rent charge. Under previous law, the beneficiary of a rent charge had the right to take possession of the property if the charge was not paid within 40 days. This remedy has now been amended so that the rent charge owner can no longer take possession of the property automatically if the rent charge is not paid within 40 days of it becoming due.

The reforms relating to enfranchisement to help protect leaseholder have not yet been implemented, leaving those leaseholders unsure as to when or if they will ever see the benefit of the much-needed reforms.

On Thursday the 21st November 2024, the Minister of State for Housing and Planning provided a long awaited update on the implementation of the Leasehold and Freehold Reform Act 2024 providing a timeframe of when the next stages will either be consulted on or implemented.

The government’s intended sequencing of the provisions for the implementation of the Act are as follows:

• Qualifying criteria: removal of the ‘2-year rule’ in January 2025.
• Right To Manage (RTM): a coherent package on the right to manage provisions in Spring 2025.
• Transparent fees: consultation very shortly on the ban on buildings insurance remuneration and replacement with transparent fees including:
  • commissions for landlords
  • property managing agents and freeholders
• Service charges and costs: provisions relating to challenging service charges and legal costs will be consulted on next year with the aim to bring them into force as quickly as possible.
• Calculator: in Summer 2025 consultation will begin on the valuation rates used to calculate the cost of premiums, which will then need to be approved in secondary legislation setting out the detail of the calculator. This will also include amending flaws in the current the Act through primary legislation. One of flaws in question are in regard to Right to Manage in buildings with mixed commercial and residential use.
• Consumer protection: 2025 will see consultation on implementing the new consumer protections provisions to enable homeowners who pay an estate management charge to have better access to information and the right to challenge the reasonableness of the charges and if required the ability to apply to the First-tier Tribunal to appoint a substitute manager.

Overall, the Act includes measures that will make it cheaper for leaseholders to enfranchise, meaning to extend their lease or buy their freehold, and we now finally have an indication of when these reforms will be considered and implemented.

In addition, Parliament set out their provisions for further reform to include additional recommendations set out in the Law Commissions report which failed to appear in the Act. The further reforms relate to the publication of the first draft of the Leasehold and Commonhold Reform Bill during this parliamentary session. These include but are not limited to:

• Ground rents: tackling unregulated and unaffordable ground rents.
• Service of Managing Agents: the poor quality of services provided by some managing agents.
• Forfeiture: the threat of forfeiture as a means of ensuring compliance with a lease.
• Fleecehold: the prevalence of ‘fleecehold’ private and mixed-tenure housing estates, referring to estates where, owing to the mix of tenure, a service charge cannot be implemented for the maintenance of common areas such as parks, roads, play areas etc.
• Commonhold: decisive first steps to making commonhold the default tenure by the end of parliament with consultation next year on the best approach to banning new leasehold flats to work alongside a robust ban on leasehold houses.
• Managing Agents: regulating the property agent sector.

Whilst the statement does not set out a timetable of bringing in all of the reforms contained in the Act, it does go a long way in addressing the issues and setting a timeframe on when leaseholders can expect the necessary reforms to be implemented.

If you have any questions regarding the changes within the Leasehold and Freehold Reform Act 2024, or you would like to extend your lease, the specialist leasehold enfranchisement team at Holmes & Hills can offer expert advice and guidance.