Homeowners will receive more rights, power and protections over
their homes under the Leasehold and Freehold Reform Act which has
become law today.
The Act will make it easier and cheaper for leaseholders to buy
their freehold, increase standard lease extension terms to 990
years for houses and flats, and provide greater transparency over
service charges. The Act will also remove barriers for
leaseholders to challenge their landlords' unreasonable charges
at Tribunal.
It will further ban the sale of new leasehold houses other than
in exceptional circumstances, end excessive buildings insurance
commissions for freeholders and managing agents, and scrap the
requirement for a new leaseholder to have owned their house or
flat for two years before they can buy or extend their lease.
The new powers also grant freehold homeowners on private and
mixed tenure estates the same rights of redress as leaseholders,
and equivalent rights to transparency over their estate charges,
and help more leaseholders take over the management of their
property if they want to. Leaseholders in some buildings are
barred from taking over the management of the site or buying its
freehold if more than 25% of its floor space is commercial – such
as shops or offices on the ground floor. But this limit will now
be increased to 50% to enable more homeowners to access Right to
Manage or the right to a collective enfranchisement.
The Act – which has officially received Royal Assent –
strengthens existing, and introduces new, consumer rights for
homeowners by:
- Making it cheaper and easier for people to extend their lease
or buy their freehold so leaseholders pay less to have more
security in their home.
- Increasing the standard lease extension term to 990 years for
houses and flats (up from 50 years in houses and 90 years in
flats), so leaseholders can enjoy secure ownership without the
hassle and expense of future lease extensions.
- Giving leaseholders greater transparency over their service
charges by making freeholders or managing agents issue bills in a
standardised format that can be more easily scrutinised and
challenged.
- Making it easier and cheaper for leaseholders to take over
management of their building, allowing them to appoint the
managing agent of their choice.
- Making it cheaper for leaseholders to exercise their
enfranchisement rights as they will no longer have to pay their
freeholder's costs when making a claim.
- Extending access to redress schemes for leaseholders to
challenge poor practice. The government will require freeholders,
who manage their building directly, to belong to a redress scheme
so leaseholders can challenge them if needed – managing agents
are already required to belong to a scheme.
- Making buying or selling a leasehold property quicker and
easier by setting a maximum time and fee that for home buying and
selling information.
- Granting homeowners on private and mixed tenure estates
comprehensive rights of redress, so they receive more information
about what charges they pay, and the ability to challenge how
reasonable they are.
The Act will further benefit leaseholders by:
- Scrapping the presumption that leaseholders pay their
freeholders' legal costs when challenging poor practice that
currently acts as a deterrent when leaseholders want to challenge
their service charges.
- Banning opaque and excessive buildings insurance commissions
for freeholders and managing agents, replacing these with
transparent and fair handling fees.
- Banning the sale of new leasehold houses so that, other than
in exceptional circumstances, every new house in England and
Wales will be freehold from the outset.
- Removing the requirement for a new leaseholder to have owned
their house or flat for 2 years before they can extend their
lease or buy their freehold.
