- The Leasehold and Freehold Reform Act 2024 (LFRA 2024) is now law.
- Most of its key provisions are not, however, yet in force, including those concerning lease extensions, collective enfranchisement and strengthening the regulation of long leasehold service charges and freehold estate management charges.
- All three main political parties have indicated that they are committed to bringing the key provisions into force, but we do not know when.
We looked at the draft Leasehold and Freehold Reform Bill back in March 2024 (see Leasehold and Freehold Reform Bill - spotlight on the undercard).
We made the point at the time that the draft Bill was making speedy progress through Parliament.
The draft Bill’s passage through Parliament accelerated after the Prime Minister announced the next general election.
The Bill was passed into law on 24 May 2024, becoming the LFRA 2024, during the so-called "wash-up" period, between the date on which the Prime Minister called the general election, and the
prorogation and subsequent dissolution of Parliament.
The wash-up period allows governments and opposition parties a final opportunity to pass legislation, before heading-off on the election trail. During this period, there needs to be cooperation and
agreement to decide what draft legislation will and will not pass into law before Parliament dissolves, meaning that political deals must be done.
Some draft Bills don't make it.
One major piece of draft legislation that did not get washed-up in May was the Renters (Reform) Bill. This means that the next government, of whatever hue, will have to introduce replacement legislation if
it wants to move ahead with the proposed ban on the use of section 21 no-fault evictions.
The LFRA 2024 did make it, however, just.
The fact the LFRA 2024 is now on the statute books does not, though, tell the whole story.
Only a very small number of the LFRA 2024's provisions have come into force, for example those to do with matters of interpretation and giving the power to make consequential regulations.
A few other provisions will come into force in July 2024, including to do with regulated rent charges and amendments to the Building Safety Act 2022.
The vast majority of the Act's provisions, however, will only come into force on a date or dates to be appointed by secondary regulations. It will be for the new government to fix these dates.
Provisions still to be brought into force
The fact that secondary regulations are needed in order to bring most of the key provisions of the LFRA 2024 into force, means that we still do not know when the proposals to do the following will take effect:
- Ban the grant of certain long residential leases of houses.
- Make it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold.
- Widen the Right to Manage so that it is available for a greater number of mixed-use buildings.
- Give leaseholders greater protections and transparency over residential service charges, insurance, administration charges and litigation costs.
- Regulate estate management charges, to provide homeowners on freehold estates similar protections to those enjoyed by residential leaseholders.
- Give both leaseholders and freeholders on managed estates a right to make information requests when they are looking to sell.
The manifestos for all three of the main political parties indicate that each of them is broadly committed to implementing the remaining provisions of the LFRA 2024.
The Labour Party has said that, if elected, it will “…enact the package of Law Commission proposals on leasehold enfranchisement, right to manage and commonhold…take further steps to ban new leasehold flats…[and] bring the injustice of ‘fleecehold’ private housing estates and unfair maintenance costs to an end”. It has gone further, saying that it intends to “finally bring the feudal leasehold system to an end” and make commonhold the default tenure. (Commonhold is an alternative form of land ownership where each flat owner owns the freehold of their home and becomes a member of a commonhold association that owns and manages the common parts.)
The Conservatives have confirmed that they would “…complete the process of leasehold reform…[and] cap ground rents at £250, reducing them to a peppercorn over time…”.
The Liberal Democrats have stated that they will “…[abolish] residential leaseholds and [cap] ground rents to a nominal fee…”.
Steps following the election
Whatever happens at the ballot box, there is still a great deal of work for the next government to do in order to pass the regulations needed to bring the key provisions of the LFRA 2024 into force, not least to work out the finer detail of the methodology for valuing lease extension and collective enfranchisement claims, under the new regime.
What the manifestos do not tell us is the timescales within which the main parties hope to bring the key provisions into force.
Given how much meat still needs to be put on the bone it is likely to be many months before the remaining provisions actually take effect.
We will provide further updates after the election as the picture becomes clearer.