The Leasehold and Freehold Reform Act 2024: What Homeowners and Leaseholders Need to Know

The Leasehold and Freehold Reform Act 2024 introduces major changes for homeowners and leaseholders across England and Wales. These reforms aim to enhance transparency, make homeownership fairer, and simplify leasehold property rights.

At Nock Deighton we handle sales and rentals of many leasehold properties, both for owner-occupier and to investors. Many people are unaware of how in-depth and sometimes onerous leases can be, and although many leases contain standard clauses, each development will have its own individual rules and regulations, which are contained with the leases themselves. Many leaseholders are also unaware of the positive changes that are going on behind the scenes, which the government are putting into place.

Key Changes

1. Banning New Leasehold Houses

New houses must be sold as freehold, unless they qualify as a ‘permitted lease.’ If a lease is granted in breach of this rule, the leaseholder can claim the freehold.

2. Lease Extensions to 990 Years

Leaseholders can extend leases to 990 years, with ground rent reduced to peppercorn rent (zero). The Act also removes marriage value, reducing costs for those with shorter leases.

3. Easier Enfranchisement

From 31 January 2025, leaseholders can:

• Buy their freehold or extend their lease immediately after purchase.

• Buy out ground rent without extending the lease.

4. Collective Enfranchisement & Intermediate Leases

The non-residential floorspace limit for collective enfranchisement increases from 25% to 50%, making it easier for leaseholders in mixed-use buildings to buy their freehold. Intermediate leases will be merged into the freehold, simplifying valuations.

5. Lower Costs for Lease Extensions & Freehold Purchases

Leaseholders no longer need to cover landlords’ legal costs in most cases, and landlords cannot recover these costs through service charges.

6. Right to Manage Expansion

Leaseholders can take over building management if commercial space accounts for less than 50% of total floorspace.

7. Greater Transparency in Service Charges

Landlords must provide detailed breakdowns of service charges and use standard forms when demanding payments.

Implementation Timeline

• 24 July 2024: New rules on rentcharge arrears, service charge disputes, and landlord insolvency notifications.

• 31 October 2024: Changes under the Building Safety Act 2022.

• 31 January 2025: Removal of the two-year ownership rule for lease extensions and enfranchisement.

What This Means for You

For homeowners, new houses will be freehold, offering greater security. For leaseholders, the Act brings longer leases, lower costs, and more transparency, giving more control over service charges and property management.

Further regulations will clarify pricing and implementation, so stay updated if you’re affected by these changes.

For more details, consult legal experts or visit the official government website