The Leasehold and Freehold Reform Act 2024 is the biggest change to leasehold law in decades. It aims to rebalance the power between freeholders and leaseholders by enhancing leaseholders’ rights, making costs more transparent, and leveling the playing field when it comes to managing buildings.
Whilst The Leasehold and Freehold Reform Act 2024 is now law, most of the big changes haven’t taken effect yet as they require secondary legislation.
Key changes in The Leasehold and Freehold Reform Act 2024
The new law includes some significant changes for leaseholders and freeholders. We’ve included the key changes and whether they’re effective and how they could affect you.
Lease extensions: The ability to secure a 990-year lease with ground rent reducing to zero (a peppercorn) is a major improvement on the current limits. Secondary legislation is required before this comes into force.
End of two-year wait to extend or buy: From 31 January 2025 leaseholders no longer have to wait two years before applying for a lease extension or to purchase the freehold.
Marriage value scrapped: Lease extensions under 80 years required a ‘marriage value’ to be paid. This often significant extra cost will be removed, although it has received legal challenge and a judicial review is underway.
Improved transparency: The Act introduces clearer rules around service charges, admin fees, and insurance. Leaseholders will gain new rights to request information, and landlords will no longer automatically pass on their legal costs. These provisions require further legislation before they take effect.
Right to Manage changes: For mixed-use buildings, the threshold for leaseholders to take over management increases from 25% to 50% in non-residential spaces. From 3 March 2025 leaseholders won’t have to pay the freeholder’s legal costs unless a Tribunal advises otherwise.
Ban on leasehold houses: New leasehold houses will be banned, with limited exceptions such as shared ownership houses. This isn’t yet in force.
The Leasehold and Freehold Reform Act 2024 impact on leaseholders
The Act promises more rights, but rights come with responsibilities, and in this case, potential financial risk. If leaseholders take over through Right to Manage (RTM), there’s no freeholder to absorb unexpected costs. Each leaseholder must pay their share in full, straight away, with no loans or payment plans to soften the impact. However, with stronger rights and more transparency, leaseholders will be better equipped to understand and manage these responsibilities.
The Leasehold and Freehold Reform Act 2024 impact on freeholders and block managers
The Act brings potential financial challenges for freeholders. From rising admin costs and reduced revenue as ground rent disappears and marriage value is scrapped, to leaseholders no longer covering their legal fees in RTM cases. Yet, clearer rules and improved transparency do create opportunities to build stronger, more trust-based relationships with leaseholders.
What’s next in The Leasehold and Freehold Reform Act 2024
The Act is a major shift, but many parts still need secondary legislation or are pending judicial review. In the meantime, don’t rush into any decisions, review your options, and stay informed of the updates by professionals who understand the changes.
At Property Fusion we cut through the legal jargon and give you clear, honest advice you can trust.
Get in touch today and let us help you navigate the changes, making sure you’re ahead of the curve.
