The government has announced that from January, leaseholders will have the right to buy their freehold or extend their lease without having to wait two years from when they bought the property. Partner Daniel Broughton examines what this and other reforms the government has promised to accelerate this year mean for leaseholders.
At the end of last year, Housing Minister Matthew Pennycook confirmed the government’s plans for implementing the Leasehold and Freehold Reform Act 2024 (“LAFRA”). In a formal written statement, he promised to “balance speed with care if we are to ensure that the measures brought into force are to the lasting benefit of leaseholders and residential freeholders”.
Two-year rule and leaseholder rights
One of the main provisions under LAFRA is section 27, which will remove the two-year ownership rule before a leaseholder can extend their lease or buy the freehold of a long leasehold house.
Although Matthew Pennycook said this would come into force in January, the position is not yet straightforward for leaseholders. While section 27 will give leaseholders an immediate right to serve a notice to buy the freehold of their house or extend their lease (as appropriate), the valuation provisions setting out what a leaseholder has to pay are still some way off. It is estimated these will not come into force for around two years to allow the details to be ironed out.
Other measures to be introduced early this year will give homeowners the right to take over the management of their building, more transparency of costs and the right to challenge unfair service charges.
Leasehold and Commonhold Reform Bill
The government will also introduce the Leasehold and Commonhold Reform Bill in the second half of this year, which it says is “a crucial step towards the next generation of homeowners benefitting from a more modern, functional and fit-for-purpose commonhold system”.
Further reforms will be made to tackle unregulated and unaffordable ground rents and to regulate managing agents to ensure leaseholders are better protected.
We will update you with further details about these reforms and the exact date they will be implemented as they become available.
If you have any queries regarding the above reforms, please contact Daniel Broughton at dbr@portner.co.uk.
For more information visit our website: https://www.portner.co.uk
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