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Leasehold and Freehold Reform Bill Becomes Law
On Friday 24th May an important piece of legislation, namely the Leasehold and Freehold Reform Bill, received Royal Assent.
The Leasehold and Freehold Reform Act 2024: FAQs
The 2024 Act made it onto the statute books on 24th May 2024, just two days after the election announcement and as the final session of this parliament was brought to a close.
Here, Mark Chick of Bishop & Sewell sets out some answers to a few frequently asked questions.
A spokesperson for The Residential Freehold Association, said:
“The Leasehold and Freehold Reform Bill is a defective and poorly evidenced piece of legislation which has ignored the outcomes of consultation with industry and leaseholders alike.
“The Government has pushed this Bill through without proper scrutiny and as a result there is work to be done to ensure there are no unintended consequences that will negatively impact leaseholders.”
Andrew Bulmer, Chief Executive of The Property Institute, gives his comments below:
“While we supported much of this Act and very much support the principle of greater transparency for leaseholders, the Act was always going to be a missed opportunity, with government steadfastly resisting amendments that had cross-party and industry support. This Act could have gone further, removing blocks that prevent leaseholders from accessing energy-efficiency measures to improve their homes in preparation for Net-Zero, and introducing mandatory qualifications and regulation for those that manage the life safety of residents and greatest assets of leaseholders, both of which were tabled as amendments on behalf of TPI during the Lords stages.
Whilst these amendments were not moved into the Act, we expect that these vital reforms will become a priority for the next administration if the current General Election polls prove correct. Encouragingly, the standard chart of accounts for service charges, something TPI campaigned for during the Building Safety Bill’s passage, has been included in the Act, which will help improve transparency for leaseholders.
“We will be updating the profession on what the new measures mean and the practical steps that they will need to think about to ensure they stay compliant and deliver on the limited promise of this Act as it comes into force and will continue our engagement and collaboration with civil servants to influence the details of the secondary legislation that will follow over the coming months.”
Comments from Scott Goldstein, Partner at Payne Hicks Beach on an Unclear Leasehold and Freehold Reform Act 2024
The Act introduces a number of welcome changes. A number of those changes will make it simpler for leaseholders to acquire the freehold, or the right to manage, or extend their leases. Historical distinctions between the treatment of leasehold houses and flats have been abolished, so that all leaseholders benefit from the same rights, which include the right to extend their lease by 990 years, as against 90 years currently for a flat, and only 50 years for a house.
The Act continues progress towards fairer charges to leaseholders, for example by giving them greater transparency over their service charges and expanding the scope of redress schemes.
Leasehold and Freehold Reform Bill becomes law – commentary by Mark Chick - director of ALEP (Association of Leasehold Enfranchisement Practitioners)
“In what are some of the biggest changes to the residential leasehold sector in the last 21 years since the Commonhold and Leasehold Reform Act 2002 came into force in 2003, we now have a major shift in the direction of the law as it relates to residential long leasehold enfranchisement (the right to buy your freehold or extend your lease), with the passing of the Leasehold and Freehold Reform Act 2024."
Bob Smytherman, Chair of the Federation of Private Residents’ Associations (FPRA)
"On behalf of The Federation of Private Residents Association Ltd I am delighted that after many years of lobbying successive Governments for a fairer legislative framework for leasehold flat owners, I am delighted to have worked cross-party with my local MP Sir Peter Bottomley as Father of the House of Commons & members of the All-Party group to get Royal Assent before General Election".
A Changing Landscape for Leasehold - The road ahead following the Leasehold and Freehold Reform Act 2024
Leigh Shapiro (Partner) and Rachel Hardington (Associate) write an in depth piece:
"A week on from the Act receiving Royal Assent, we look at what we know, and what we don’t know, about the changing landscape for leasehold, and the road which still lies ahead."
Following the enactment of the Leasehold and Freehold Reform Bill, Robert Poole, Director of Glide (part of Leaders Romans Group) said:
"For years, the leasehold system has been a topic of contention, leaving homeowners and managers of blocks of flats grappling with uncertainties. The Leasehold and Freehold Reform Act aims to introduce measures to increase leaseholders' rights, provide them with more control over their properties, and make lease extensions more affordable. It heralds a landmark shift in the leasehold system and a future in which homeowners are granted greater autonomy over their homes, with reduced costs and red tape.
“So it is good news that the Leasehold and Freehold Reform Act has passed into legislation imminently despite many other Bills falling victim of the general election’s timing.
“As leasehold reform moves forward, the changes will undoubtedly create some challenges. A thoughtful and comprehensive approach that consults widely with practitioners, leaseholders and freeholders and considers all potential challenges is necessary to make the transition as smooth as possible.”
New Chair of The Property Institute
The Property Institute (TPI) is pleased to announce the appointment of Baroness Hayter as its new Chair.
Baroness Hayter replaces TPI’s incumbent Chair, Felix Keen, who is stepping down as interim Chair, a role he has held for the last year.
Appointed to the House of Lords in 2010, Baroness Hayter has held senior roles as Shadow Deputy Leader of the Lords, and Shadow Minister for Brexit and for Consumers. She has considerable chairing experience – having served as both Chair of the Labour Party and its National Executive Committee, of the Lords International Agreements Committee and of the Legal Services Consumer Panel. Baroness Hayter has held senior positions in consumer affairs, including chairing the Property Standards Board, the Property Agents Code of Conduct Working Group and the government’s advisory group on Client Money Protection.
Commenting on her appointment, Baroness Hayter said: “Getting residential property management right is key both for residents and landlords, but also for the professionals entrusted with managing this complex but vital service. The Property Institute is in a strong position, supporting agents and thus consumers alike. All such agents should be professional, trained and qualified to a high standard. This is the objective I share with the TPI.”
Outgoing Chair, Felix Keen said: “It has been an honour to be a part of The Property Institute, at a time when the management of people’s homes is undergoing seismic change and reform. I am passionate about improving standards and customer experience and am proud of our work to drive forward greater professionalism and transparency. Baroness Hayter joins TPI at a pivotal moment and brings a wealth of experience both in the property sector and in championing the interests of consumers, the perfect fit for the future direction of our industry. I look forward with excitement to working with Baroness Hayter and the TPI Board Members, to ensure we continue to serve and support our members and steer our profession to meet the challenges ahead.”
TPI Chief Executive, Andrew Bulmer said: “I am delighted to welcome Baroness Hayter as Chair of the Board at TPI. Her chairing experience and her knowledge of legal and consumer affairs will both be great assets in our work to ensure that millions of leaseholders and residents are protected by competent, ethical and professional property management practitioners. “This is exactly the right appointment at exactly the right time as The Property Institute supports our industry to grow and change for the better. I would also like to warmly thank Felix for his valuable contributions during his tenure as interim TPI Chair and I am delighted he will remain on the Board.”
The Property Institute (TPI) Service Charge Index 2024
The Property Institute (TPI) has been concerned about rising service charge bills for some time, and in response to concerns and questions from leaseholders and other stakeholders, they have collaborated with their members to release service charge cost data and investigate the drivers behind rising service charge bills.
They are pleased to introduce the TPI Service Charge Index and Report, which will be repeated annually, to provide averaged data on service charge expenditure across the estates TPI members manage, as well as a detailed analysis into the trends, and the factors causing rising bills.
To read more on this and service charges, click here. You can also find the graphic in higher quality if you click on the link or image.
The Service Charge Index will be updated annually with new data. If you have any enquiries or questions about the Index and Report, please contact Jaclyn Thorburn jthorburn@tpi.org.uk
