What are the Changes?
The Act includes a number of new measures to strengthen and protect prospective and existing homeowners, including:
- Banning the sale of new leasehold houses, except in exceptional circumstances.
- Making it cheaper and easier to extend leases (including removing the two-year ownership requirement before leaseholders can exercise their statutory rights to lease extension) or buy freeholds.
- Increasing the standard lease extension term to 990 years for houses and flats (up from 50 years for houses and 90 years for flats).
- Abolition of ‘marriage value’ for leases of less than 80 years. Marriage value is the increase in the value of the property following the completion of a lease extension (reflecting the additional market value of the longer lease).
- Enhancing transparency over service charges by requiring freeholders or managing agents to issue standardised bills.
- Simplifying and reducing the cost for leaseholders to manage their buildings and appoint their preferred managing agents.
- Removing the obligation for leaseholders to cover freeholders’ costs when exercising enfranchisement rights.
- Expanding access to redress schemes for leaseholders to challenge poor practices. Freeholders who manage directly will now be required to belong to a redress scheme, as managing agents already are.
- Accelerating and simplifying the buying or selling of leasehold properties by setting maximum times and fees for necessary information.
What’s not Covered?
The general election and subsequent change of government in July 2024 has, to some degree, interfered with the passage of the Act. Many commentators were expecting a cap on ground rent and a ban on the forfeiture of long residential leases, but this is not included. However, with implementation of the Act not expected until 2025 or even 2026, there may be further changes ahead.
If you have any questions regarding the Act and the proposed changes, our property department is on hand to assist you.