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Mark Chick is a Director at the Association of Leasehold Enfranchisement Practitioners (ALEP) specialising in lease extensions, freehold acquisitions and leasehold enfranchisements.
One of the most significant changes to have occurred in the residential leasehold sector in the past 21 years since the Commonhold and Leasehold Reform Act 2002 came into force in 2003 was the passing of the Leasehold and Freehold Reform Act 2024, which significantly changes the direction of the law regarding enfranchisement of residential long-term leaseholds (the right to purchase the freehold or extend the lease).
ALEP has long been at the forefront of the campaign for reform in the residential leasehold sector and has continually pressed for negotiations with the government on legal reform since it was formed some 16 years ago.
The Law Commission’s excellent work on the subject in 2018 and its final report in 2020 set out the basis for substantive, lasting change and major consolidating legislation. The Government promised to answer this question, and has done so much late in this Parliament, with the Leasehold and Freehold Reform Bill. This is a piecemeal answer in this Administration’s final year, and seeks to address the “headline” matters of abolishing matrimonial values ​​where there are less than 80 years remaining on the lease and banning the building of new leasehold homes – all of which were promised by Sajid Javid when he was Housing Secretary in 2017.
Whilst the provisions of the Leasehold and Freehold Reform Act 2024 address to some extent many of the issues that we and our members have cited for many years (such as the two-year qualification period and the position on successive claims), it is in some sense a ‘piecemeal’ piece of legislation and makes fundamental changes to the assessment regime to the detriment of freehold holders and in favour of leaseholders.
While members welcome the overall prospect of reform, the LHFRA and the way it was passed at the end of this Parliament means a series of changes have been rushed through. Some of our members have been working with the Government to ensure this legislation is workable, and we have been in constant dialogue with the DLUHC. Whatever any member’s personal opinion may be (we represent a range of perspectives), as an Association we simply want to see a workable system put in place.
We support the Government’s commitment to lasting change in this area, and a poll conducted when the Bill was first announced showed 77% of Members supported the need for reform. However, we would appreciate urgent clarity on the expected time frame for it to begin. The public would similarly welcome some clarification on this point. We remain concerned that there may be unintended consequences to pushing this Bill through literally as the last business of this Parliamentary session. This has been seen with other legislation such as the Building Safety Act 2022.
Our members will be eager to advise their clients on what the new law means for them and it would be helpful if there was clarity on the coming into force dates for each section. We also expect that a future administration will want to continue to pursue its plans for reform in this area. With that in mind, we are happy to discuss future plans with politicians. We are a little concerned that the next administration is likely to need to return to this area fairly quickly, given the almost immoral rush on the statute book with this legislation, which was first announced in the King’s Speech in November and became law six months later.
While the Government has achieved its goal of enacting this legislation, there is still uncertainty as to the outcome of the consultation on ground rent. Given that we are entering the ‘Limitation Period’ (previously known as ‘Purdah’) ahead of a general election, any proposals in this direction may have to wait. For this reason, any significant movement to address the necessary secondary legislation is not expected until after the election. The same may be said for the general provisions on commencement. We await further clarification and very much hope that this will happen in the very near future.