Leasehold and Freehold Reform Act 2024

1.  What is the Leasehold and Freehold Reform Act 2024?

The Leasehold and Freehold Reform Act will bring in changes to the management long leases, including those held by lessees of the City of London Corporation. The Act was passed in May 2024, however most of the changes it contains are not expected to come into effect until 2025/26, as they require secondary legislation to be drafted first.

2. What does the act do?

The new law includes some significant changes which will benefit leaseholders, including:

• Increasing the standard lease extension from 90 years to 990 years
• Abolishing ‘marriage value,’ which is the premium that is payable by a leaseholder who wants to extend their lease when it has less than 80 years remaining
• Removing the requirement for a new leaseholder to have owned their house or flat for two years before they can extend their lease
• Setting time limits for landlords to provide information when a leaseholder buys or sells their home
• Limiting the fee that landlords can charge for sales packs when leaseholders want to sell their home
• Giving leaseholders greater transparency over their service charges by making freeholders issue bills in a standardised format that can be more easily scrutinised and challenged
• Removing the presumption that leaseholders pay their landlord’s legal costs when challenging service charges

3.  When does the act come into force?

Although the act has been given Royal Assent, most of the provisions will not come into force until secondary legislation is passed to bring it into effect. There is no definite timescale for this, however the government has indicated it is likely to be in 2025/26.

Some limited parts of the act, including provisions relating to building safety, came into effect on 24 July 2024.

4. What are the current rules on lease extensions?

Current law (the Leasehold Reform, Housing and Urban Development Act 1993) provides that leaseholders can extend their lease for 90 years. If the lease has under 80 years remaining, ‘marriage value’ is payable, which can add a significant sum onto the premium payable to the landlord. Leaseholders must have owned the property for two years to qualify for a lease extension.

5. What happens if I want to extend my lease now?

If you want to extend your lease now, the current rules will still apply until further notice. We are unable to advise you on the best course of action to take, as this will depend on your circumstances. You should consider seeking advice from a solicitor or an independent advice service, such as the Leasehold Advisory Service and City Advice.

6. Does this affect the length of new leases granted under the Right to Buy?

No. The grant of a new lease under the Right to Buy scheme is governed by different legislation, the Housing Act 1985. The 1985 Act provides that new leases under the Right to Buy should be for ‘the appropriate term’.

The ‘appropriate term’ is defined as ‘not less than 125 years’, however the lease may start from the date that the first lease in the same building was granted. This is the current policy of the City Corporation.

In practice, this means that you may be granted a 125-year lease with a start date in the 1980s or 1990s, as most residential blocks owned by the City Corporation saw their first Right to Buy sale in this time.

7. Is the City Corporation considering changing their policy on granting new leases with start dates in the past?

Yes, we are considering the implications of changing our policy, to grant new leases of 125 years from the date of completion, rather than the date of the first lease granted in the relevant building.

This will require consideration and a final decision by the relevant Committee. We are intending to take this decision to Committee in the Autumn of 2024.

8. Where can I find more information on the new law?

There are some useful sources of information online, including:

• The Homeowners Alliance
• Explanatory Notes on the act, which includes detailed commentary on the legislation and the policy background

Contact us:

For lease-related enquiries, please contact our Home Ownership Team by email, or phone 020 7332 3013.

Or write to: Home Ownership Team, Barbican Estate Office, 3, Lauderdale Place, London EC2Y 8EN