The Leasehold and Freehold Reform Bill 2024

The Government published the first draft of the Leasehold and Freehold Reform Bill 2024 on 27 November 2023. Progress can be seen via the Commons Library.

If passed this will make changes to improve home ownership for leaseholders in England and Wales.

The main changes are as follows;
Lease extensions will rise from 90 to 990 years with ground rent reduced to a peppercorn.
Remove the two-year ownership requirement.
Increase the 25% ‘non-residential’ limit to 50%.
Valuation to change to a set form including proposals to remove marriage value, cap ground rents, and prescribe deferment and capitalisation rates)

How Has the Construction industry Reacted
There have been differing views and responses. The reforms to simplify the process are less contentious but the changes to the valuation methodology have not been received well by freeholders.

The larger freeholders including the large estates, pension and investment funds may challenge the reforms as an infringement of their human rights.

What are the next steps?
It has passed its 1st and 2nd readings and the committee stage, so it is now at the Report Stage in the House of Commons. The new legislation has been swiftly advancing through Parliament, indicating the Government’s determined effort to deliver on their manifesto commitments on leasehold reform.

The exact amendments and timescales are not yet known, although the Government expect the Bill to receive Royal Assent in the summer of 2024, with the majority of reforms commencing in 2025 and 2026. Some reforms may not be operational until 2028 due to the need to implement secondary legislation.

Watch out for more updates about The Leasehold and Freehold Reform Bill 2024 via our news section.