The Leasehold and Freehold Reform Bill, which B P Collins’ property team reviewed (here), became the Leasehold and Freehold Reform Act 2024 (“LFRA 2024”) after receiving Royal Assent on 24 May 2024. Some of the intentions behind the Bill include to significantly improve the rights of long leaseholders of residential property, regulate estate management charges for freeholders and provide them with similar protections as leaseholders and also to regulate the enforcement and remedies relating to historic rentcharges. Although not yet fully in force, a number of the provisions have now been implemented.
By way of reminder, owning a leasehold interest in land means you own a property for a certain length of time, however, subject to terms contained in a lease, you do not own the land on which that property is situated. By contrast owning a freehold interest in land means you own the building and land upon which it stands, in perpetuity, and without any conditions attached. In England approximately 19% of properties, equating to approximately 5 million, are leasehold. There are also over 1 million freehold houses which pay estate management charges and this number is on the rise with new estates often containing communal gardens and private roads.
After years of campaigning, the LFRA 2024 is a significant step towards achieving better security and control for leaseholders and freeholders affected by estate management. Some of the provisions now in place include:
Removal of the two year Ownership Requirement
Previously, one of the requirements to be a ‘qualifying tenant’ in order to claim a lease extension of a leasehold flat or house or to buy the freehold of a leasehold house was to have owned the leasehold interest for a minimum of two years. Since 31 January 2025 there is no such requirement and providing you are the registered proprietor you can make a claim (per section 27 of the LFRA 2024). It is also worth noting that although not in force yet, section 33 of the LFRA 2024 will also grant those claiming lease extensions for houses and flats a term of 990 years.
Changes to Right to Manage
The Right to Manage is a statutory right allowing leaseholders to take over the management of their building, even without the agreement of the freeholder, providing certain requirements are met. This could give the leaseholders control over the collection of service charges and maintenance of communal areas and the building of which their flats form part. Since 31 March 2025 section 49 of LFRA 2024 allows a Right to Manage to be claimed in mixed use buildings where no more than 50% is non-residential compared to previously when the non-residential element could be no more than 25%. When making a Right to Manage claim leaseholders are now no longer responsible for covering the freeholder’s costs and instead each party would generally bear their own costs (except in limited circumstances where a court or tribunal makes a costs order) (per s50 LFRA 2024).
Enforcement and Remedies of ‘Regulated Rentcharges’
A rentcharge is an annual or periodic sum charged on freehold land which hasn’t been created by a landlord and tenant relationship or by way of interest. Section 113 LFRA 2024 came into effect on 24 July 2024 and has created provisions requiring rentcharge owners of historic rentcharges (created pre-1977) to follow a number of steps before they can take action to recover or require payment of the rentcharge. Section 113 also removes statutory remedies to enforce payment including a draconian right of entry to possess the land and take income from it until the rentcharge sum is paid.
Matthew Pennycook, Minister of State for Housing and Planning released a statement on 21 November 2024 discussing the LFRA 2024 and the timeline of when parts of the Act were to be implemented.
Whilst we are a long way off from having a fully implemented Act, we are certainly moving in the right direction.
If you’d like further legal advice or information on the points raised in this article or any property related issue, please contact B P Collins’ property team at enquiries@bpcollins.co.uk or call 01753 889995.
