LAFRA is a rollercoaster

Over the course of the last few years, we have published several bulletins on the subject of the Government's intended reform of leasehold legislation (and, in particular, in relation to enfranchisement) and the (slow) progress made in that initiative.

The latest development in the process came on 21 November, when the Government issued a ministerial statement. Once again the Government confirmed its commitment to press ahead and implement the provisions contained in the Leasehold and Freehold Reform Act 2024 (“the 2024 Act”)  “as quickly as possible” and to take further steps to introduce commonhold as an alternative form of tenure to the current leasehold tenure, and yet, once again (possibly more than ever), the effect is that uncertainty prevails, and interested parties, and those representing them, are left in a state of limbo.

First, what we do know is that in January 2025, the Government will bring into force the part of the 2024 Act which abolishes the requirement that a tenant making an enfranchisement claim must have owned its property for at least two years.

There is also a firmer commitment from the Government when it comes to changes to Right to Manage claims, with it stating that in Spring 2025, it will bring into force the provisions as to greater access to such claims, and the voting rights and costs associated with them.

However, beyond these measures, there is little by way of any concrete timetable and (in a statement that is likely to prompt hearts on all sides to sink, in light of the number of consultations to date), the Government has said it will be undertaking consultations on several of the provisions in the 2024 Act. The subject matter of those consultations is to include provisions relating to legal costs payable, service charge issues such as buildings insurance costs being included in service charge demands, and, in advance of secondary legislation, on rates applicable to the valuation of enfranchisement claims.

What is particularly telling is that the statement not only refers to the need for consultation and secondary legislation (and that the legislation is, therefore, some distance from coming into force), but it mentions “serious flaws” which the Government has identified within the 2024 Act which require rectification by way of primary legislation. The statement does not make clear what aspects are flawed, save that these include “the valuation process”.

The statement then turns to the question of commonhold, with a repeated commitment from the Government to seek to introduce it as a system to (eventually) replace leasehold, but this time with the announcement of its intention to introduce a White Paper in early 2025, and a new draft Leasehold and Commonhold Reform Bill later in the year. The stated aim is to deliver commonhold as the default tenure in place of leasehold by the end of this Parliament, through working with all interested parties in the industry, again with the promise of a further consultation process.

Finally, there is a nod towards the aforementioned Bill also tackling other issues in the leasehold system, such as the forfeiture of leases, the section 20 notice procedure required when undertaking major works, and to the Government seeking to introduce the regulation of managing agents.

In summary, we continue to receive very clear signals from the Government that it will be moving forward with reform in this area, but it remains uncertain when that will come to fruition, save that this latest statement suggests that the delay might be counted in years, rather than months.