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Under the Act – introduced under the then Conservative government - substantial adjustments to leasehold rights and ground rents (England and Wales) were introduced.
The 2024 came soon after the Leasehold Reform (Ground Rent) Act 2022 which ended ground rents for most newbuild residential leasehold properties. The aim of the new Act is to make leasehold ownership even fairer for consumers, though most of the provisions are not yet in force.
Provisions that have come into effect:
- Leaseholders, if the registered owner, are now permitted to extend their lease or buy their freehold without having to wait for two years after purchase under s27 of the 2024 Act. The Leasehold and Freehold Reform Act 2024 (Commencement No. 2 and Transitional Provision) Regulations 2025 came into force on 31 January 2025.
- And on 3 March the Act’s Right to Manage (RTM) provisions came into force. For example leaseholders no longer have to foot the freeholder’s legal bill when an RTM claim is made (s50); and the commercial limit on RTM claims has risen to 50%.
Notable changes under the Act to come include:
- The standard lease extension will be increased to 990 years with a peppercorn ground rent where a premium is payable.
- Removing marriage value (the increase in the value of a property post-lease extension) for the purposes of calculating the cost of a statutory lease extension or freehold acquisition. The government expects to consult in summer 2025 on the rates to be used for calculations and secondary legislation will then be required.
- Grants of new leasehold houses will be banned (with few exceptions).
- More leaseholders will enjoy the right to extent or by their lease. They will also benefit from greater transparency when it comes to service charges and property management as well as a new right to seek information about them.
Flaws
Practitioners may have leaseholders’ clients who may question whether or not hold out before extending their lease. Unfortunately, Labour’s housing minister recently said the 2024 Act contains “a small number of specific but serious flaws” for which rectification will require primary legislation. So far, he has identified five flaws including a loophole in the valuation scheme within the Act; and an omission on shared ownership lease extensions.
The Labour government says it will quickly implement its provisions, but this seems unlikely given primary legislation will be required to deal with identified flaws. One expert recently warned it could be years before the reforms are rolled out and that leaseholders should take action now if fewer than 80 years are left on their lease.
It may be useful to refer to information from The Leasehold Advisory Service (LEASE) which sets out important considerations for leaseholders who are unsure whether to extend or purchase their lease yet.
On the practical front, a consultation on proposals to introduce transparent permitted insurance fees for landlords, freeholders and managing agents closed on 24 February 2025. We can expect further consultations on the Act’s provisions in the coming months.
We’re covering this topic, including Macroeconomic and Legislative Influences on Commercial Property Transactions and the impact of economic trends like inflation and interest rate changes on commercial property investments and transactional strategies at our LAW2025 Events.
See the full list of our upcoming LAW2025 events and conferences here.
