LATEST NEWS & UPDATES

JANUARY 2025

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Leasehold Reform

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Leasehold Reforms

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What coming up this month:

 

The Government has previously said that it intends to commence the relevant provision of the Leasehold and Freehold Reform Act 2024 (“the Act”) to remove the ‘2-year rule’ this month. This will mean that leaseholders will no longer have to wait two years after purchasing their property before exercising rights to extend their lease or buy their freehold, giving more leaseholders control over their properties from the outset."

 

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What is coming up later in 2025: 

 

The Government have said that it will:

 

• in Spring 2025 bring the Act’s right to manage provisions (expanding access, reforming its costs and voting rights) into force as a coherent package at the same time allowing more leaseholders in mixed-use buildings to take over management from their freeholders, and leaseholders making claims will, in most cases, no longer have to pay their freeholder’s costs.

 

• be looking to consult on the Act’s provisions on service charges and on legal costs, bringing these measures into force as quickly as possible thereafter. Once implemented, leaseholders will be able to more easily challenge service charges they consider unreasonable, and landlords will be required to apply to the relevant court or tribunal for approval before they can pass legal costs from such challenges back to leaseholders.

 

• the Act includes measures that will make it cheaper for leaseholders to enfranchise – buy their freehold or extend their lease, giving them security over their property in the long term. In summer 2025 the Government will be consulting on the valuation rates used to calculate the cost of enfranchisement premiums. Parliament will then need to approve the secondary legislation that sets out the detail.

 

• in the second half of 2025 publish a new Draft Leasehold and Commonhold Reform Bill (which will, amongst other things, include the banning of ground rent and forfeiture) that would be subject to broad consultation and additional parliamentary scrutiny. Prior to that it will in early 2025 publish a White Paper on reforms to commonhold

  

• be consulting in 2025 on the best approach to banning new leasehold flats so this can work effectively alongside a robust ban on leasehold houses. It will also be engaging on the conversion of existing flats to commonhold.

 

 

 

At a recent appearance (7 January 2025) before the Housing, Communities and Local Government Committee, Angela Rayner, the Housing Secretary stated that the Government has an aim to introduce leasehold reform legislation this parliamentary year 

 

 

CONSULTATION LAUNCHED BY THE GOVERNMENT ON INTRODUCING PERMITTED INSURANCE FEES

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The Government have already launched a Consultation seeking views on proposals to prevent freeholders, property managing agents and landlords from imposing on leaseholders opaque and excessive charges related to building insurance, often in the form of commissions.

 

Instead, they would only be able to charge a fair and transparent permitted insurance fee to leaseholders. Secondary legislation will set out what is permitted. 

 

This consultation closes at 11:59pm on 24 February 2025

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Full details of the Consultation can found via the link below:

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END OF THE TWO YEAR OWNERSHIP RULE FOR LEASE EXTENSIONS

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The Housing Minister, Matthew Pennycook announced on the 23 January:

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“I have today signed regulations to remove the two-year ownership rule for leaseholders of flats to extend their lease and leaseholders of houses to extend their lease or buy their freehold.”

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These were both provisions within the Leasehold and Freehold Reform Act 2024 which required there further regulations before they could come into force

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As from 31 January 2025 Leaseholders will no longer have to wait 2 years before they can make a claim for an extension of their Lease, but they ought to seek prior specialist advice upon the merits of making any such claim

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JUDICIAL REVIEW TO GO AHEAD ON CERTAIN PROVISIONS OF THE LEASEHOLD AND FREEHOLD REFORM ACT 2024

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The High Court has now granted permission for six claimants (being Landlords owning the Freehold reversionary interest in residential leasehold properties) to seek a Judicial review of certain provisions of the Leasehold and Freehold Reform Act 2024 (including in relation to the proposed changes to marriage value when calculating the premium to be paid for a Statutory Lease Extension). 

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The request was made on the basis that the application of such provisions would infringe their Human Rights, and the hearing is set for July

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RENTERS RIGHTS BILL 2024

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This Bill has now passed through the House of Commons and will now be working its way through the House of Lords

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Whist it mainly deals with residential lettings, one advantage of the Bill (if it becomes law in its current form) is that it contains a provision making it clear that tenancies over 7 years cannot be assured tenancies

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The importance of this is that one of the current issues with residential Leases is that those where the Ground Rent payable exceeds £250 per annum (or £1,000 per annum in London) are classed as assured tenancies under the housing Act 1988, which has adverse consequences where there are rent arrears

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At present a Deed of Variation is usually required to overcome the issue, but such a Deed should no longer be necessary once the Renters Rights Bill is passed into law

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