Leasehold Reform: In on the Act

The Leasehold and Freehold Reform Bill had been making relatively swift progress through the Parliamentary process but was still due to be subject to further scrutiny and debate at the point of the announcement of the intention to call the general election.

The election announcement triggered a frantic two-day legislative “wash up period” before the dissolution of Parliament and the Leasehold and Freehold Reform Bill gained the cross-party support required to made it onto the statue books on 24 May as the Leasehold and Freehold Reform Act 2024. 

The accelerated progress from Bill to Act means that the Act is in a form substantially the same as the Bill from which it originates, including provisions making it overall cheaper and easier for tenants to extend their lease or buy their freehold once the Act is formally implemented including:

• The extension of the standard lease term to 990 years for houses and flats (up from 50 years in houses and 90 years in flats).
• The abolition of the requirement that a leaseholder must have owned their house or flat for 2 years before they can extend their lease or buy their freehold.
• An increase in the threshold for the non-residential element in collective enfranchisement claims from 25% to 50%.
• The abolition of marriage value when valuing the freeholder’s interest on enfranchisement.

It should however be noted that one key and controversial objective of intended reforms, namely the abolition or capping of ground rents, which was the subject of an ongoing consultation process at the date of the election announcement, is not included in the Act.

As noted above, there was only a very limited window of opportunity for final debate and amendments before the Bill was passed. Whilst a number of amendments were made before the Act was passed on 24 May, these amendments appear not to impact on the provisions outlined above.

Notwithstanding that the Act has now been passed, the reforms set out above will not take effect until formally implemented with section 124(3) of the Act providing “The [other] provisions of this Act come into force on such day or days as the Secretary of State may by regulations appoint.” Accordingly, implementation will be a matter for whichever party forms the Government on 4 July and, in many cases will require secondary legislation. As a result, the timing of the introduction of the reforms introduced by the Act remains uncertain save for the very limited application of section 124(2) which provides a commencement date for a small number of provisions in the Act none of which relate to leasehold reform.