The Leasehold and Freehold Reform Bill was first introduced into Parliament in November 2023 and was given royal assent on 24 May 2024, finally becoming law in England and Wales ahead of the general election.

As we wrote previously, the Leasehold and Freehold Reform Act 2024 (the Act) aims to improve the rights of residential long leaseholders of houses and flats in England and Wales.

The Act intends to make it easier for leaseholders to extend their lease, buy their freehold and take over management of their building. However, the proposal to abolish or cap ground rents for existing leaseholders, a key flagship aspect of the proposals, has been withdrawn.

The proposal to abolish or cap ground rents was a controversial policy which was campaigned for by leaseholders but opposed by many landlords and investors. The decision to withdraw it is a result of the recent general election announcement, meaning the Act had to be rushed through Parliament before it was dissolved to avoid losing all of the work on the Bill so far. Many landlords and some investors will breathe a sigh of relief that ground rents for existing leaseholds will remain unscathed for now.

However, a few key highlights that are included in the Act are:

• The standard lease extension term has been increased from 50 years for houses and 90 for flats to 990 years.
• The sale of new leasehold houses is now banned, other than in exceptional circumstances. This means that every new house in England and Wales will be freehold.
• Owners on private and mixed-use estates will be entitled to standardised information on the service charges they pay to make it easier to challenge the reasonableness of those costs.
• Leaseholders will be entitled to extend their lease or buy their freehold immediately upon acquiring the property, rather than waiting until they’ve owned the property for two years.
• There has been an increase in the limit of “non-residential” floor space from 25% to 50% which applies before leaseholders can participate in collective enfranchisement or the Right to Manage, meaning more tenants in mixed-use properties will qualify to participate in collective enfranchisement or the Right to Manage.

A full examination of the Act is awaited when the Act is published.