Leaseholders now have greater rights to extend their leases or buy the freehold of their building.
The long-awaited implementation of the Leasehold and Freehold Reform Act 2024 has now started, with the issuing of regulations on 22 January 2025 which bought into effect some of the provisions.
From 31 January 2025, leaseholders will no longer have to wait 2 years after buying their leasehold flat before being able to exercise their right to extend the lease, but can do so at any time. It was previously the case that leaseholders would need to be registered as the legal owner of their flat for 2 years before then being able to exercise their statutory right under the Leasehold Reform, Housing and Urban Development Act 1993 to claim an extended lease of 90 years in addition to the remaining term and reduce the rent to a peppercorn (nil).
The legislation also removes the 2-year ownership requirement for the owners of leasehold houses who wish to extend their lease by 50 years or buy the freehold under the Leasehold Reform Act 1967.
Housing Minister Matthew Pennycook has said that this starts the planned comprehensive overhaul of the leasehold system. There is an intention for the Government to continue to implement the reforms set out in the Leasehold and Freehold Reform Act 2024 and to introduce the Commonhold and Leasehold Reform Bill, which is expected to grant further rights to leaseholders.
The precise timings of the upcoming reforms is unknown, although Minister Pennycook has indicated that the provisions relating to the ‘right to manage’ in the Leasehold and Freehold Reform Act 2024 will come into force in the Spring. This will allow more leaseholders to exercise the right to manage and change the costs regime so that in most cases each party pays their own costs and leaseholders are no longer responsible for paying the landlord’s costs.
There is also an intention to introduce the Commonhold and Leasehold Reform Bill in the second half of 2025 to give leaseholders greater rights, protections and control over their homes.
If you own a leasehold property and would like advice on extending your lease or buying the freehold of your building, or you are a landlord in receipt of such a claim, please contact Pippa Garrod in our Property Litigation team: [email protected]
