Following Rishi Sunak's announcement that a general election will be held on Thursday, 4 July, there are certain bills that were making their way through Parliament that have survived the "wash-up" before Parliament is prorogued. The long awaited reform to leasehold property has mostly been achieved in the Leasehold and Freehold Reform Bill 2024 which was amongst the last pieces of legislation to pass into law. The Act will undoubtedly be enabled when the next government is formed when Parliament returns.
However, there will be disappointment that the proposed cap on ground rent was omitted. Michael Gove, the Levelling Up Secretary, had initially wanted a minimum payment capped £250. As it has taken a considerable time for any reform to provide leaseholders with the security that freeholders enjoy, it may take another lengthy period before the issue of ground rent is addressed.
A house purchase is, for most people, the largest and most important transaction they will ever make. A fifth of the residential properties in the UK are leasehold, mainly urban properties are, the new Act makes extending a lease or buying the freehold a far easier and cheaper process with the obligation to pay the freeholder's legal fees no longer applicable.
Michael Gove's stated objective of abolishing leasehold system potentially moving to a commonhold system where occupants take responsibility for the buildings they jointly own has not been achieved undoubtedly due to the strength of the opposition driven by freehold investors.
Olu Ajasa, a partner, commented "The Act is will ensure that leaseholders will have greater control over their property and aims to limit the high charges that are often demanded in respect of buildings insurance commissions by freeholders and managing agents." Olu further commented "all new properties are to be freehold with no more leasehold properties to be created, unless there are exceptional circumstances. There will be firm control over excessive costs with certain charges removed altogether. The Act also strengthens the leaseholder's ability to challenge unfair practices."
The changes the Act has introduced are as follows:
- It will be far easier and less expensive for leaseholders to buy their freehold.
- The standard lease extension term increases to 990 years for houses and flats providing greater security for leaseholders.
- There will be greater transparency over service charges. The Act also permits leaseholders to challenge their landlords' unreasonable charges at the Tribunal.
- The sale of new leasehold houses other than in exceptional circumstances, will be banned.
- excessive buildings insurance commissions for freeholders and managing agents will be banned.
- There will no longer be a requirement for a new leaseholder to have owned their house or flat for two years before they can buy or extend their lease.
- leaseholders will be able to take over the management of their building and will be allowed to appoint the managing agent of their choice.
- Freeholders living in private and mixed tenancy estates will have the same rights of redress as leaseholders and also the same rights to transparency over their estate charges.
- leaseholders will no longer have to pay their freeholder's costs when making a claim.
- Leaseholders will have access to redress schemes to enable them to challenge poor practice.
- freeholders, who manage their building directly, must now belong to a redress scheme so leaseholders can challenge them if needed.
- Buying or selling a leasehold property will be quicker as a maximum time and fee for the required information for buying and selling will be set.
- in properties where more than 25% of its floor space is commercial which bars leaseholders from taking over the management will have the floor space increased to 50% to enable more homeowners to access Right to Manage.
Giambrone and Partners real estate lawyers have extensive experience in assisting leaseholders with purchase and extending their leases, as well as advising and resolving challenges to management companies.
Olu Ajasa has extensive experience and expertise in all types of alternative dispute resolution for commercial issues, as well as commercial litigation. Olu advises on complex, high-value, domestic and multi-jurisdiction matters. Olu has expertise that also extends to real estate both commercial and residential, assisting clients with their freehold sale and purchase as well as assisting in lease extensions, guiding clients through the complexities of buying and selling properties. resolving real estate disputes (commercial and residential) and landlord and tenant law (commercial and residential).
Olu assists clients in complex cross-border commercial disputes, shareholder disputes, partnership disputes, contractual disputes, loan facility agreements, secured lending, both corporate and insolvency relating to individuals. Olu has expertise in resolving real estate disputes (commercial and residential) and landlord and tenant law (commercial and residential).
He also has considerable experience in corporate and personal insolvency matters, including preparing and responding to statutory demands, winding-up petitions, investigating company directors and also assists with all aspects of corporate insolvency litigation.
Olu is highly regarded by his clients for his resoluteness in satisfactorily concluding complex disputes swiftly and in line with their commercial objectives.
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