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Leasehold and Freehold Reform Act – commentary from the Association of Leasehold Enfranchisement Practitioners

by | May 28, 2024

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Following the enactment of the Leasehold and Freehold Reform Bill, Mark Chick, director of ALEP (the Association of Leasehold Enfranchisement Practitioners)  said: 

“In what are some of the biggest changes to the residential leasehold sector in the last 21 years since the Commonhold and Leasehold Reform Act 2002 came into force in 2003, we now have a major shift in the direction of the law as it relates to residential long leasehold enfranchisement (the right to buy your freehold or extend your lease), with the passing of the Leasehold and Freehold Reform Act 2024.

ALEP has long been at the forefront of campaigning for change in the residential leasehold sector and right back from its beginnings just over 16 years ago, ALEP has continuously sought to engage with government over legislative change.

 
 


The Law Commission’s excellent work on this in 2018 with its final reports in 2020 set out the basis for real and lasting change and a major piece of consolidating legislation. Government promised to answer this and they did, albeit very late in this parliament with the Leasehold and Freehold Reform Bill – a piecemeal answer in the final year of this government, looking to deal with the ‘headline’ items – the removal of marriage value where leases have less than 80 years to run and a ban on the creation of new leasehold houses. All of these being things that Sajid Javid promised when he was the Housing Minister back in 2017.

Whilst the provisions of the Leasehold and Freehold Reform Act 2024 go some way to addressing a number of the issues that we and our members have mentioned for years (such as the two year qualification period and the position relating to successive claims), this is in some senses a ‘piecemeal’ piece of legislation, making radical changes to the valuation regime, to the detriment of freeholders and the advantage of leaseholders. 

Our members welcome the general prospect of reform but, what we have with the LHFRA and the way in which it has been passed at the end of this parliament is a hurried set of changes. Several of our members have worked with government to ensure that the legislation is workable, and we have been in dialogue with DLUHC throughout. Whatever the individual views of our members (and we represent a range of viewpoints) as an Association, we simply wish to see a workable system brought in.

 

Whilst we support the government’s commitment to lasting change in this area, and when polled when the bill was first announced 77% of our members supported the need for reform. However, we would welcome prompt clarity about the likely timescales for commencement. We anticipate the public would likewise welcome certainty about this. We do have some concerns that by pushing this bill through, quite literally as the last piece of business in this parliamentary session that there may be unintended consequences lurking. We have seen this with other legislation such as the Building Safety Act 2022. 

Our members are keen to advise their clients as to the what the new law means for them and certainty around the likely commencement dates of the various sections will assist. We also anticipate that any future government will wish to continue to pursue the reform agenda in this area. With that in mind we are happy to engage with politicians as to what any future programme may hold. We are slightly concerned that it is likely that the next government may need to return to this area quite promptly, given the fact that the legislation has made the statute books in an almost indecent hurry, having first being announced in the King’s speech in November and becoming law six months later. 

Whilst the government has achieved its stated objective of putting this legislation on the statute books, there is still uncertainty over the outcome of the consultation on ground rents. Any proposals in this direction are likely to have to wait, given that we are now heading into the ‘restricted period’ (formerly known as ‘purdah’) in the run up to the general election. Given this, we do not anticipate significant moves to deal with the necessary secondary legislation until after the election. The same may be true of the provisions relating to the commencement generally. We await further clarification and very much hope that this is forthcoming in the very near future.” 

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