Leasehold reform 2024

If you’re the owner of a leasehold property, you’ll soon benefit from having more rights, thanks to a new Act that became law in May 2024.

The Leasehold and Freehold Reform Act provides benefits that will make it easier and cheaper for leaseholders to extend their lease or buy their freehold.

What are the key highlights:

Extending your lease by 990 years

Before the Act comes into effect, you can legally extend the lease of your house by 50 years and the lease on your flat by 90 years. However, with the reform, you will be able to extend the lease of both houses and flats by 990 years.

The ability to extend your lease by 990 years reduces the need to extend your lease as often, saving you and future owners hassle and expense. Additionally, the cost to extend your lease by 990 years should be a very similar price, if not the same, as extending it by 90 years.

However, it is worth noting that a lease extension of 990 years won’t add any additional value to your property either.

Clearer information about service charges

Previously there had been no legislation or rules as to the formatting of service charges, meaning they could be very hard to read and identify what you were exactly being charged for. With the reform, the service charges will need to be provided in a standardised format, providing leaseholders with much more transparency and clarity over what they are being charged for, making it easier for them to challenge where necessary.

New builds will no longer be sold as leaseholds

Although over recent years the amount of new builds being sold as leaseholds has dropped significantly, this Act bans the sale of new leasehold houses, other than in exceptional circumstances. This means that every new house in England and Wales from now will be a freehold  (new build flats will not be effected by this new legislation).

You no longer have to be the owner for two years before extending or buying the lease

The new reform will scrap a rule that didn’t let owners of leasehold properties extend or buy their lease, until they had been the official owner with the land registry for two years. This means properties with a shorter lease will become more attractive and sellable, as the new owners will be able to extend or buy the lease, without any delay.

Leaseholders will no longer have to pay for their freeholders legal fees

Within the current rules of lease extensions, leaseholders have to pay their own legal fees as well as the legal and valuation fees of the freeholder when extending the lease. However, within the new Act this rule has been removed, meaning that leaseholders and freeholders pay for their own fees. This dramatically reduces lease extension costs for the leaseholder.

Other outcomes from the Leasehold and Freehold Reform Act

As well as the above, other outcomes from the reform include:

For more information about these changes, you can read the Leasehold reforms become law article on the Gov.uk website.

When does the Leasehold and Freehold Reform Act come into effect?

Although the Act received Royal Assent on 24th May 2024, there is currently no timeframe as to when the Act will become legally binding. We will continue to monitor this article and provide updates as and when possible.

Should you extend your lease if you’ve recently extended it?

If you recently extended your lease through the current legislation, you could get another lease extension, however it’s likely that you won’t need to. Because the cost of the longer lease extension is likely to remain the same, as well as having no effect on the property’s value, a lease with 100 years is still deemed as good, and therefore an additional extension isn’t necessary until your lease approaches having only 80 years left.