Friends, there is good news for homeowners in England and Wales. The Leasehold and Freehold Reform Act has just been passed, giving you a number of important benefits and protections. The Act represents a major change in ownership and provides leaseholders with greater rights, transparency and control over their assets. We will see in detail what this law is from this post.
Easier and Cheaper Leasehold Ownership
This new legislation will make it easier and more affordable to extend a lease or buy a freehold property outright. This means you are freed from the hassle of frequent lease extensions and have the security of long-term ownership.Calculate Leasehold Extension using our Calculator.
Advantages of a long lease agreement:
Standard lease term: Now the standard lease term for both houses and flats has been extended to 990 years. This is a significant increase from the previous 50-year tenure for houses and even more than the 90-year tenure for flats. This means you won’t need to extend the lease in the future, giving you peace of mind and increasing the value of your property.
Lower costs: The new law has made the process of lease extension and freehold purchase easier and cheaper. This means you will pay less in legal fees and other expenses.
More certainty: A long-term lease agreement gives you more certainty of living in your house or flat. This can give you more confidence to decorate and repair your home, and you won’t have to worry about being forced to move in the future.
Transparency and Fairness in Service Charges
Standardized Billing: Landlords and managing agents are now required to bill service charges in a standardized format. What does this mean? This means that you will now clearly know what service you are paying for and how much.
Challenging Unreasonable Charges: You can now challenge unreasonable service charges in court. What does this mean? This means that if you feel you are overcharging the landowner, you can file a lawsuit against them.
Taking Control of Property Management
Right to Management: This Act makes it easy and affordable for leaseholders to take the management of their building into their own hands. Now, they can choose the manager of their choice and have more control over how their property is maintained.
This right provides greater freedom and transparency to the leaseholders. They can now play an active role in the management of the building and participate in the decision-making process.
Right of Franchise: This right (buying the freehold together) makes acquiring the freehold more affordable. Now, leaseholders are not responsible for the freeholder’s legal costs, reducing the financial burden associated with collective franchise.
This right encourages leaseholders to form a community by coming together and collectively owning their building.
Additional Protections and Benefits
- Redress Scheme: Now all freeholders directly managing buildings are required to participate in redress scheme. This will give the leaseholders rights to resolve disputes and challenge mismanagement.
- Expedited Transactions: Maximum time and charges are fixed for getting information on home buying and selling. This makes buying and selling leasehold properties faster and easier.
- Rights for estate owners: Owners on private and mixed-tenure estates now have the same rights as leaseholders. They can seek information on estate charges and challenge their reasonableness.
- Ban on Unclear Commissions: Unclear and excessive building insurance commissions are banned for freeholders and managing agents. Commissions will now be replaced by transparent and fair charges.
- Ban on New Leaseholds: With few exceptions, new leaseholds are prohibited. This means that most new homes in England and Wales will be freehold from the start, making ownership more secure.
- Abolition of waiting period: New leaseholders do not need to complete a two-year waiting period to increase rent or purchase freehold. Now they can start this process immediately after purchasing the property.
The Leasehold and Freehold Reform Act is very important for landlords in England and Wales. The Act gives leaseholders more control, transparency and protection over their assets. By facilitating lease extensions, ensuring reasonable service charges and simplifying property management controls, the Act helps landlords make informed decisions.