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The Leasehold and Freehold Reform Act 2024: What you need to know.
The Leasehold and Freehold Reform Act 2024 introduces significant changes for both leaseholders and property managers. Below are the key provisions to be aware of in the Act: What’s the impact for Leaseholders?
1. Empowering Ownership: - The Act extends lease terms to 990 years for both houses and flats, providing greater security and reducing the need for costly future extensions - Leaseholders can start the lease extension process immediately upon purchasing a property, removing the previous two-year ownership requirement 2. Reduced Costs: - Abolishing "marriage value" for leases with less than 80 years remaining, if implemented, will simplify and reduce the cost of lease extensions - Ground rents for lease extensions will be at a peppercorn rent for houses (the Act does not cap ground rents for existing leaseholders) 3. Transparent Service Charges: - New requirements for standardized billing formats will make it easier for leaseholders to understand and challenge unnecessary charges. (the new format is expected to be available in 2025).
4. Simplified Right to Manage:
- The Act raises the limit of non-residential floorspace in mixed-use buildings from 25% to 50%, making it easier for leaseholders to take control of managing their building.
5. Ground Rent Buyout:
- Leaseholders now have the right to buy out their ground rent without extending the lease.
6. Freed from Leasehold:
- The sale of newly built houses on a leasehold basis is banned, meaning most new properties will be freehold.
What's the impact for building managers? 1. Clearer Communication: - M2 Property will work closely with leaseholders to ensure they understand the Act's implications and their new rights. 2. Adapting Service Charges: - Adopting the new standardized billing format will enhance transparency about building costs, with these formats expected to be available in 2025. 3. Supporting Right to Manage:
- If leaseholders decide to take over management, M2 Property can facilitate a smooth handover and provide ongoing support.
Implementation Timeline:
- Initial Provisions: Amendments to the Building Safety Act 2022, introduced in the Leasehold and Freehold Reform Act 2024 and designed to improve the handling of building safety issues, will come into effect on July 24, 2024.
- Full Implementation: The remainder of the Act, including key provisions such as standardized billing and reporting formats, will be implemented in stages, with the bulk of changes expected to take effect between 2025 and 2026, depending on the decisions of the new government.
What This Means
The Act fosters a more collaborative environment between leaseholders and building managers. M2 Property welcomes these changes, believing they will lead to fairer and more transparent management processes for all residents.
Looking Ahead
As the official implementation date is yet to be announced, M2 Property is prepared to guide leaseholders through the Act's provisions. We will continue to provide updates and support throughout the implementation process. For any inquiries, leaseholders are encouraged to contact M2 Property.
Disclaimer
This blog is intended for general information purposes only and does not constitute legal advice.
This summary integrates the essential points from both the provided content and additional sources to give a comprehensive overview of the Leasehold and Freehold Reform Act 2024.
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