The Leasehold and Freehold Reform Act 2024 (Commencement No. 2 and Transitional Provision) Regulations 2025 introduce significant changes to leasehold property rights in England and Wales. The regulations enact Section 27 of the Act, removing the two-year qualifying period that leaseholders previously needed to meet before extending their lease or purchasing their freehold. Importantly, this change applies retrospectively, meaning it is not limited to new leases signed after the commencement date but also benefits existing leaseholders.
Provisions already in force
Several provisions of the Act have already come into effect. On 24 July 2024, key sections were implemented, including regulations related to rent charge arrears, recovery of legal costs through service charges, and repealing Section 125 of the Building Safety Act 2022, which previously addressed remediation costs of insolvent landlords. Provisions were also introduced to enhance insolvency notifications for higher-risk and relevant buildings.
Further amendments were introduced on 31 October 2024, focusing on enhancing the Building Safety Act 2022 aspects. These amendments provide greater clarity and regulatory control over the remediation of building defects, the issuance of remediation and contribution orders, and the interpretation of key terms within the Act to ensure consistent application.
Leasehold campaigning
Propertymark has been actively campaigning for leasehold and freehold reforms to ensure fairer, more transparent, and more accessible homeownership for leaseholders. Through ongoing engagement, we want improved transparency in service charges, and ensuring that leasehold property owners have a clearer path to extending their leases and purchasing their freeholds.
We have consistently highlighted the importance of protecting leaseholders from escalating ground rents, excessive service charges, and complex legal processes. The two-year qualifying period removal is a significant step towards simplifying the leasehold extension and enfranchisement process.
What to expect next
The UK Government intends to introduce the right to manage provisions of the Act in Spring 2025. These provisions will increase the 'non-residential' limit, enabling leaseholders in buildings with up to 50% non-residential floorspace to purchase their freehold or take over its management. This change is expected to offer more flexibility and opportunities for leaseholders in mixed-use properties.
via [Propertymark]