In May 2024 the outgoing Tory government passed the Leasehold and Freehold Reform Act (LFRA) on its last day in office. However few of its provisions are active as most require secondary legislation. Although the Labour party campaigned on implementing this as a priority, an announcement in November 2024 by Housing Minister Matthew Pennycook lowered expectations with talk of ‘complexities’. In a statement he claimed many of the Act’s clauses were rushed and badly drafted and it was going to take the Government longer than expected to refine and remove any loopholes. This has had the unfortunate effect of dividing some leasehold campaigners into opposing camps, one crying betrayal, another giving the Government the benefit of the doubt. He added that any decision on ground rents and the cost of extensions would be deferred to a consultation in July 2025.
Judicial review
However frustrating this is for leaseholders, there is a logic to it in view of a decision made in January 2025 at the Royal Courts of Justice. A group of seven freeholder organisations were granted leave to hold a judicial review of LFRA on the grounds that it may reduce their property revenue and constitute a breach of their human rights. Why the judge didn’t consider the human rights of millions of leaseholders whose lives have been on hold waiting for the wide range of much needed reforms in this Act is an unanswered question! However until we know the outcome of this hearing there is not much point in the Government drafting legislation that would have to scrapped.
The successes
This year some of the less controversial features of the Act have however been passed.
Two year wait scrapped
As of 31 Jan 2025 new buyers can begin a lease extension immediately instead of waiting for two years. This makes selling a property with a short lease much easier. Generally lenders don’t like lending on a flat with less than 80 years so the seller would often give notice under Section 42 and hand the process over to the new buyer, both agreeing a price that factored in the anticipated costs. Now buying and selling flat with a short lease is easier. However other clauses in LFRA promise a 999 year extension by default, a lot better than the current 90, so unless your lease is critically low, there’s still a good case for waiting. See https://www.lease-advice.org/news-item/leasehold-reform-abolition-of-the-two-year-rule/
Easier RTM
The law provides for leaseholders to essentially sack their managing agent and exercise a formal Right to Manage. It’s by no means easy but for many leaseholders has been worth it. However there are some exclusions. Buildings with a mixture of flats and other uses such as shops and offices have been excluded from this option if the non-residential floor space was more than 25 per cent. But as of 3 March 2025 this non-residential limit is set to increase to 50%.
Leaseholders will also no longer be required to cover the legal fees of their freeholder when making a Right to Manage claim. This is important because freeholders would gratuitously slow the process down with frivolous and time and money consuming claims to frustrate the process.