by Sam Akbay
Key Leasehold Reforms Effective from 31 January 2025
The Leasehold and Freehold Reform Act 2024 is set to introduce transformative changes for leaseholders in England and Wales. With the Commencement No. 2 and Transitional Provision Regulations 2025 coming into force, these reforms aim to simplify leasehold property rights and make homeownership more accessible.
Removal of the Two-Year Qualifying Period
Effective from 31 January 2025, Section 27 of the Act will remove the two-year qualifying period previously required for leaseholders to extend their lease or purchase their freehold. This change is retroactive, benefiting not only new leases signed after this date but also existing leaseholders. This marks a significant step towards a more equitable system for leasehold property owners.
Changes Already in Effect
Key provisions of the Act have already been implemented in stages:
- 24 July 2024: Regulations addressing rent charge arrears, recovery of legal costs through service charges, and the repeal of Section 125 of the Building Safety Act 2022 came into force. These changes also introduced stricter insolvency notifications for higher-risk buildings.
- 31 October 2024: Additional amendments focused on enhancing the Building Safety Act 2022. These provided greater clarity on building defect remediation, the issuance of remediation and contribution orders, and the interpretation of key terms for consistent application.
Advocacy for Leasehold Reform
Leasehold reform has long been a priority for Propertymark and other industry advocates. Campaigns have pushed for fairer practices, such as improved transparency in service charges and a streamlined process for lease extensions and freehold purchases. The removal of the two-year qualifying period is a direct result of these efforts, simplifying the process and reducing barriers for leaseholders.
Challenges Ahead
Despite these advancements, certain concerns remain. For example, the ground rent cap was not included in this wave of reforms, leaving some leaseholders vulnerable to escalating costs. Advocacy efforts will continue to address these gaps and push for further improvements.
What to Expect Next
Looking ahead to Spring 2025, the UK Government plans to implement the right-to-manage provisions of the Act. This will increase the ‘non-residential’ limit, allowing leaseholders in buildings with up to 50% non-residential floorspace to purchase their freehold or assume management control. This change is expected to benefit leaseholders in mixed-use developments, offering greater flexibility and opportunities.
Supporting Leaseholders
At Sam Akbay Property Agency, we’re committed to keeping our clients informed about the latest legislative changes. These reforms mark a significant milestone for leaseholders, and we’re here to help you navigate the evolving property landscape. If you have questions about how these changes might impact you, don’t hesitate to get in touch with our team.
Stay tuned for further updates and insights as more provisions come into effect in the coming months.
