What is the UK Leasehold and Freehold Reform Bill?

Date: April 2024

In a leasehold arrangement, the homeowner owns the property but not the land it sits on, which is typically owned by a freeholder. This can lead to various challenges and costs, including escalating ground rents, costly lease extensions, and difficulties in selling properties with short leases.

The Leasehold and Freehold Reform Bill aims to tackle these issues, providing greater security and control for homeowners while curbing exploitative practices by some freeholders and property management companies.

It follows the Leasehold Reform (Ground Rent) Act 2022, which was the first part of reform on leaseholds. This ended ground rents for most new qualifying long residential leases in England and Wales. The Leasehold and Freehold Reform Bill is intended to go further and deliver more significant changes.

Key Provisions of the Bill

1. Simplify lease extensions

Increase the standard lease extension term for houses and flats to 990-years and end ground rent. Leaseholders will also be able to extend leases when they are close to expiry without it becoming more costly, and they will not be required to have owned their property for two years before they can benefit from these changes.

2. Improve transparency and reduce poor practice

Improve transparency over leaseholders’ service charges by their freeholder or managing agent. This includes replacing buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees.

This will empower leaseholders to challenge unreasonable costs and freeholders will need to belong to a redress scheme so leaseholders can challenge them if needed. To further help, leaseholders will not necessarily be expected to pay their freeholders’ legal costs when challenging poor practice.

3. Speed up the buying and selling process

Make buying or selling a leasehold property quicker and easier by setting a maximum time and fee for the provision of information required to make a sale (such as building insurance or financial records) to a leaseholder by their freeholder.

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