Significant Changes in Leasehold System: The Leasehold and Freehold Reform Act 2024

Leasehold and Freehold Reform Act 2024

Dear House Owner,

If you are a leaseholder, it’s essential to be informed about the Leasehold and Freehold Reform Act 2024 which completed its journey through Parliament and became law on May 24th. This legislation represents the most significant change to the leasehold system in years.

Key Objectives of the New Legislation

The primary goal of this new legislation is to simplify and reduce costs for leaseholders looking to extend their leases or purchase the freehold of their properties. Although the Act is now officially law, many key changes will not take effect immediately. Secondary legislation is required to implement provisions such as the abolition of the marriage value (explained below) and setting new formulas for calculating the costs of lease extensions. These additional legislative measures are expected to be in place by 2025 or 2026.

Benefits for Leaseholders

Once fully implemented, the new legislation will provide significant benefits for leaseholders, including:

  • Longer Lease Extensions: The standard lease extension will increase from 90 years for flats and 50 years for houses to 990 years for both houses and flats.
  • Cheaper Extensions: The Act abolishes the ‘marriage value’—a specific element used to calculate the cost of a lease extension for leases with less than 80 years remaining. This means leaseholders will no longer have to share the increase in their property value with their freeholder when extending the lease.
  • No Two-Year Wait: Leaseholders will be able to extend their leases as soon as they purchase a property, without waiting two years or taking over a notice from the previous owner.
  • Reduced Costs: Leaseholders will no longer be required to pay freeholders’ legal costs when extending their lease or buying the freehold, except in certain circumstances.

Opportunities for Leaseholders

If you are a leaseholder interested in extending your lease or purchasing the freehold of your property, this new legislation presents an opportunity to do so under more favourable conditions.

To discuss how you can make the most of these reforms, please contact the Welcome Home team. We will guide you through the lease extension procedure and answer any questions you may have.

Share

Leave a Reply

Your email address will not be published. Required fields are marked *