The UK government have introduced major reform of the Leasehold and Freehold Reform Act 2024 (LAFRA) with the aim of simplifying the lease extension process and reducing the costs involved.
In this article, we outline the two main changes that have been implemented and look at what is proposed for the future.
What has already changed?
1.) Removal of the Two-year ownership rule
This came into effect from 31 January 2025.
Leaseholders no longer need to wait until they have owned their leasehold property for two years before becoming eligible for a lease extension, or to buy the freehold. Please note, from a practical perspective, you will need to wait for the Land registry application to be processed, evidencing you as the new registered owner, before being able to serve a notice!
This change applies to both houses and flats and will benefit existing leaseholders.
This will help to combat short term leases in sales, as the buyer can exercise their right to a lease extension immediately once they become the new owner and avoid transactional delays.
2.) Relaxation of the rules relating to Right to Manage
This came into effect from 3 March 2025.
The criteria for leaseholders to collectively take control of their building has been relaxed so that the limit on non-residential space has risen from 25% to 50%. This is very relevant to residents in mixed-use buildings with shops and offices, to manage their own blocks.
Leaseholders will no longer have to pay the freeholder’s legal fees when pursuing a Right to Manage.
What is proposed for the future?
The Leasehold & Commonhold Reform Bill, expected to be published in the second half of 2025, will aim to limit forfeiture for minor breaches and regulate managing agents, to tackle extortionate management fees. It may also help to strengthen leaseholder rights across enfranchisement, Right to Manage, and freehold purchase.
2025/2026 may therefore see some further reform to key areas such as;
- Unfair service charge – In July 2025, the Government have announced plans to address this issue, with the commencement of a 12-week consultation. This will review matters such as exploring mandatory professional qualifications for property managers and fees transparency.
- Longer lease terms – Leases may be able to be extended for 990 years rather than 90 years.
- Removing leaseholder liability for Landlord costs – If leaseholders wish to challenge poor practice on behalf of their landlords, the presumption that they have to pay the landlord’s legal costs for the challenge will be scrapped.
- Assisting with conveyancing timelines – There will be a maximum time and maximum fee for providing home buying and selling information which is hoped will assist with speeding up the leasehold conveyancing process.
Please note these reforms are still going through consultation and will not become legislation until all relevant pieces of secondary legislation have been passed. Existing laws remain in place until then.
Should I extend my lease now or wait?
This should be decided on a case-by-case basis as there will be many contributing factors.
At Goughs we will be keeping updated on consultation outcomes throughout Summer 2025 and will be able to help you plan wisely with trusted advice.
