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Accelerated royal assent leaves room for future leasehold and freehold reform challenges and changes

Posted on 12 June 2024

The leasehold and freehold reform Bill hastily received royal assent before Parliament was prorogued. On the one hand, it's a relief to have closure. On the other, the speed means that the drafting could have done with further consideration in places. The rush allowed the Government neatly to sidestep the controversial issue of abolition of ground rents – although we expect that whoever wins the election will attempt to tackle this at some point – and will not address regulation of managing agents, even though it appeared that it had been ruled out in any event. Bearing in mind the Government is encouraging tenants to take control, additional safeguards would have been welcome, even if these could only be brought in with further regulation later.

There has of course been much coverage given to major changes which are included in the Act in relation to long leaseholds: increasing extended lease terms to 990 years rather than 90, the removal of payment of marriage value in lease extension claims, a change to the method of determining the price payable on enfranchisement or extension of leases and the abolition of new leases of houses in most circumstances. But one aspect of the Act of interest to residential conveyancers is the section on sales information requests.

One of the most frustrating parts of the leasehold conveyancing process can be trying to obtain management information promptly from a third party (i.e. the landlord or management company) who has no interest in the underlying sale/purchase transaction. The new legislation allows for setting a timeframe for the provision of this information, a limit on the fees which can be charged and introduces an ability to claim damages where there is a failure to comply. As seems to be usual these days, the Act leaves the detail to be dealt with by way of further regulations and so these provisions cannot come into force until they have been drafted. Hopefully, they will follow soon and will encourage recalcitrant landlords to provide the necessary material more quickly.

Another plus point which hasn't been given much coverage is the regulation of estate management charges. For many years, owners of leasehold properties have benefitted from regulation of service charges. However, owners of freehold properties who can also be required to pay management charges for the provision of services on shared areas of an estate, haven't had the same level of protection. Now that houses must be sold freehold in most cases, regulating estate management charges in a similar way to service charges will be even more important.

Although the Leasehold and Freehold Reform Act was passed, the Renters Reform Bill fell at the last hurdle, meaning that "no-fault" evictions will remain for the time-being. There may be a little wait but given the public support for this measure it's hard to imagine that any new Government would abandon the idea completely.

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