Leasehold and rental reform update
Leasehold and Freehold Reform Act 2024 (LAFRA)
LAFRA, which received royal assent on 24 May 2024, represents one of the most transformative pieces of legislation for the leasehold sector, alongside the recent Building Safety Act 2022 and the Leasehold Reform (Ground Rent) Act 2022.
While a limited number of the provisions have already come into force, others require secondary legislation and further consultations.
Some noteworthy changes have already been implemented, including the removal of the two-year waiting period for lease extensions and enfranchisement and the changes to the Right to Manage process, giving more leaseholders the right to make a claim. There has also been a consultation on insurance commissions which closed on 24 February 2025.
Looking ahead, further consultations are expected later this year including in relation to management of service charges and estate management charges.
Commonhold and Leasehold Reforms
The Government has expressed a commitment to reviving commonhold ownership, proposing that it will become the default tenure by 2029. A White Paper on Commonhold was issued on 3 March 2025, outlining the Government’s recommendations. The legal framework for these proposals is likely to be incorporated into the upcoming Leasehold and Commonhold Reform Bill (LACRB), anticipated later this year.
Additionally, it is understood that LACRB will address other leasehold challenges, including the regulation of existing ground rents, the possible removal of forfeiture as a mechanism for dealing with breaches of a lease, a review of the Section 20 consultation procedure for major works and strengthening the rights of freehold homeowners.
Renters Rights’ Bill (RRB)
Published on 11 September 2024, the RRB seeks to enhance tenant protections and clarifies the status of shared ownership leases.
In terms of shared ownership, it is proposed that the Housing Act 1988 will be amended, so that leases with a fixed term exceeding seven years cannot be assured tenancies. Consequently, shared ownership leases will no longer fall under this category.
The RRB proposes various changes for the rental market, including the abolition of fixed-term tenancies and the end of Section 21 ‘no-fault’ evictions. These changes are complemented by a variety of other proposals including, new possession grounds with modified notice periods, reforms to the Section 13 rent increase process, provisions addressing rental discrimination, bidding practices, and advance payments being taken, and implied terms permitting tenants to keep pets. The RRB proposes a new private rented sector ombudsman, the creation of a private rented sector database, and the extension of the Decent Homes Standard and Awaab’s Law. There will also be strengthened enforcement powers for local authorities.
Conclusion
These legislative changes signal a significant shift in the leasehold and rental market and aim to balance the interests of leaseholders, tenants, and landlords. As consultations and legislative processes continue, the proposals may alter slightly but it is clear that the landscape of the sector is likely to be very different in the coming years.
If you would like to discuss any leasehold issues, please request an initial consultation with one of our experts.
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