259: The Leasehold and Freehold Reform Act 2024 becomes law

On 24 May 2024, the Leasehold and Freehold Reform Act 2024 (the Act) became the last act passed in the current Parliament. The Act aims to improve the rights of residential long leaseholders of houses and flats in England and Wales.

Controversially, Gove’s plans to remove ground rent for existing leaseholders, or cap it at £250, were removed from the Act. The ban on forfeiture of long residential leases and the introduction of commonhold were also scrapped.

What does the Act do?

The Act should make it easier for leaseholders to extend their lease, buy their freehold and take over management of their building. It includes the following:

• the standard lease extension term has been increased from 50 years for houses and 90 for flats to 990 years;
• the new ‘standard valuation method’ will make it less costly for leaseholders to extend their lease or buy the freehold;
• the sale of new leasehold houses is now banned, other than in exceptional circumstances, so all new leasehold houses will be freehold;
• owners of private and mixed-use estates will be entitled to standardised information on the service charges they pay to make it easier to challenge those costs; and
• leaseholders will be entitled to extend their lease or buy their freehold immediately, rather than waiting until they’ve owned the property for two years.

When does the Act come into effect?

Although the Act has now received Royal Assent, it is not yet in effect. Most of the Act requires statutory instruments to implement it, which are expected to take effect in 2025 at the earliest

The parts of the Act that amend the Building Safety Act 2022, and deal with rent charge arrears, are expected to become law on 24 July 2024.