
Introduced on 24th May 2024, the Leasehold and Freehold Reform Act 2024 has some major reforms including:
1. Extended Lease Terms
Leaseholders of houses and flats can now extend their leases by up to 990 years, eliminating the requirement for frequent renewals. This brings leasehold extensions for houses in line with flats, with both being set at "peppercorn rents" (effectively zero) for extensions.
2. No Marriage Value
The Act abolishes the "marriage value" that previously allowed landlords to claim an additional premium when leases had less than 80 years left. This will significantly reduce costs for leaseholders.
3. Simplified Enfranchisement
The process for leaseholders to collectively purchase the freehold of their buildings is made easier by raising the allowable proportion of non-residential space in mixed-use buildings from 25% to 50%.
4. Immediate Leasehold Rights
Leaseholders will no longer have to wait two years after purchasing a property before extending their lease or seeking enfranchisement.
5. Building Safety Provisions
The Act amends the Building Safety Act 2022, focusing on protections for leaseholders in relation to service charges and building safety costs in certain high-risk buildings.
While these changes are significant, many provisions still require additional secondary legislation to come into effect, leaving some aspects, such as the capping of ground rents for existing leaseholders, unresolved for now.
The Act also introduces several important changes to rentcharges, specifically through Section 113, which modifies parts of the Law of Property Act 1925. Key changes include:
1. Regulated Rentcharges
The Act introduces a new category of "regulated rentcharges," which cannot be created under the Rentcharges Act 1977. This means any new rentcharges must adhere to strict criteria, making it harder for landlords to impose unjust rentcharges.
2. Notice Requirements for Arrears
Landowners now must receive a 30-day written notice from the rentcharge owner before any action can be taken to recover arrears. This notice must also include prescribed information, and landowners cannot be charged for the preparation or service of such demands.
3. Enforcement Restrictions
Rentcharge owners are no longer allowed to enforce arrears by taking possession of the property or granting a lease over the land. This limits their ability to penalize landowners severely for rentcharge arrears.
4. Administration Charges
There is a cap on administration charges associated with rentcharge arrears recovery, protecting landowners from excessive fees
However, the changes to rentcharges under the Act apply mainly to historic rentcharges, not estate rentcharges which relate to the service charge payable for the maintenance of a housing estate, for example. Historic rentcharges are those that were created before the Rentcharges Act 1977, which prohibited the creation of new ones.
The Act focuses on regulated rentcharges, which are typically older charges that still affect many properties today. It restricts how these charges can be enforced, including prohibiting extreme measures such as taking possession of property for arrears. The new rules are designed to protect landowners from unfair or excessive practices associated with these historical rentcharges.
How Can Timms Help?
If you are considering purchasing a property and would like a conveyancing quote, please contact the conveyancing team on freephone 0800 011 6666, via email at legal@timms-law.com or use our free online calculator here.