The Leasehold and Freehold Reform Act 2024 becomes law in England and Wales

Many leaseholders who have been considering lease extensions have been eagerly awaiting the Leasehold and Freehold Reform Bill’s passing. With parliament being dissolved this week the Bill was fast-tracked through the process and is now law, although its provisions are not yet in effect.

The Leasehold and Freehold Reform Act Act makes the following changes to the lease extension process:

• Statutory lease extensions will add 990 years onto the existing term. Under the previous legislation, only 90 years were added.
• There is no longer a requirement to own your leasehold property for 2 years before you have the ability to claim a statutory lease extension.
• Extending leases of less than 80 years will no longer incur marriage value. This considerably increased the premium payable for lease extensions under the previous regime.
• Simplifying the premium calculation. The premium is the price that is paid for the additional years. In comparison to the previous legislation, premiums will be reduced – some significantly so.
• No new leasehold houses can be created.

Commencement

The Leasehold and Freehold Reform Act 2024 is a sizeable piece of legislation. The  above points will come into effect once the Secretary of State passes a series of statutory instruments.

Next Steps

The crucial statutory instruments are expected to be brought in between 2025 and 2026.

At the moment there is no set timeline for commencement. Parliament is due to be officially dissolved on 30 May, the election will be followed by parliament’s summer recess. Labour has suggested that, should they win the July election, they may well legislate further on the issues mentioned above. As such, the Act has brought some clarity while uncertainty remains around the timeline and potential further reform.