Homeowners gain more rights and protections under the new Leasehold and Freehold Reform Act

This landmark legislation promises to simplify and reduce the costs associated with buying freeholds and extending leases, as well as to ensure greater transparency in service charges. Additionally, it removes several barriers leaseholders face when challenging unreasonable charges by landlords. So, what are the key provisions of the Act?

Simplifying freehold purchases and lease extensions

One of the key provisions of The Act is that it makes it easier and more affordable for leaseholders to buy their freehold or extend their lease. Standard lease extension terms have been increased to 990 years for both houses and flats, compared to the previous 50 years for houses and 90 years for flats. This change ensures leaseholders can secure their ownership without the burden of future extensions.

Strengthening consumer rights

The Act introduces and reinforces consumer rights for homeowners by:

• Making it easier and more affordable for leaseholders to extend leases or buy freeholds.

• Standardising service charge billing to enhance transparency and accountability.

• Facilitating the takeover of building management by leaseholders, empowering them to choose their managing agents.

• Enforcing a maximum time and fee for home buying and selling information to streamline the process.

• Requiring freeholders who manage their buildings directly to belong to a redress scheme, providing leaseholders with an avenue to challenge poor practices.

Additional protections for freeholders

Freehold homeowners on private and mixed tenure estates now enjoy the same rights as leaseholders, including:

• Comprehensive rights of redress to challenge unreasonable estate charges.
• Access to information about what charges they pay and the ability to challenge these charges.
• The ability to take over the management of their property, including buildings where commercial space exceeds 25% of the total floor space. This threshold has been increased to 50%, granting more homeowners access to Right to Manage or collective enfranchisement.

Transparency in service charges

Leaseholders will benefit from greater transparency regarding their service charges. Freeholders and managing agents must now issue standardised bills that are easier to scrutinise and challenge.

Removing barriers to challenging unreasonable charges

The Act abolishes obstacles that previously prevented leaseholders from contesting unreasonable charges at Tribunal.

Leaseholders will no longer be required to cover their freeholder’s legal costs when making a claim, making it more financially feasible to challenge poor practices.

Banning the sale of new leasehold charges

The sale of new leasehold houses will be banned, except in exceptional circumstances. This ensures that all new houses in England and Wales will be sold as freehold properties from the outset.

Ending excessive buildings insurance commissions

The Act puts an end to excessive buildings insurance commissions for freeholders and managing agents, replacing them with transparent and fair handling fees.

Streamlining the leasehold process

The requirement for new leaseholders to own their house or flat for two years before they can extend their lease or buy their freehold has been removed, allowing for immediate action upon acquisition.

A milestone for homeownership

With Royal Assent officially granted, the Leasehold and Freehold Reform Act represents a significant step forward in strengthening homeowner rights and setting the stage for a fairer housing market. By addressing longstanding issues and introducing new protections, the Act ensures that homeowners can enjoy greater security, transparency, and control over their properties.