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For over 75 years, Ronald Fletcher Baker LLP has been providing expert legal advice from its offices in London, Manchester, and Exeter. The firm has considerable experience in acting for medium to large national and international companies, governments, financial institutions, high net worth individuals, families, and corporate investors, many of whom are based overseas.
The passing of the Leasehold and Freehold Reform Act 2024 (LFRA 2024) was seen as a starting point for the long-awaited reform to the areas of lease extension…
United Kingdom
Real Estate and Construction
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The passing of the Leasehold and Freehold Reform Act 2024 (LFRA
2024) was seen as a starting point for the long-awaited reform
to the areas of lease extension, collective enfranchisement and
right to manage. The proposed reforms were, it is fair to say,
overwhelmingly tenant friendly with some of the key points
being:
Remove the 2-year ownership requirement for the leaseholder to
commence the process;
Increase the compulsory extension from 90 years to a whopping
990 years;
Remove the requirement for the leaseholder to pay ‘marriage
value’;
Remove the ability of the landlord to recover their costs from
the leaseholder in most situations.
However, the LFRA 2024 did not provide a commencement date nor
calculations as to how any new regime would work leading to the
position of secondary legislation being required to make the
proposed changes.
There were however whispers that such tenant-friendly reforms
would be challenged by large landlord groups as potentially being
against their human rights as removing marriage value payments
would potentially wipe millions of pounds from the property market
for no compensation.
In the King’s Speech, Labour confirmed that some of the
changes proposed would require more time to consider but some of
the low-hanging fruit could be dealt with in more short order.
To that end, the first commencement regulation has now passed
which acts to actively remove the 2-year ownership requirement as
of Friday 31 January 2025 for lease extensions of
flats.
It will also act to scrap the ability of personal
representatives to serve notices on behalf of a deceased legal
owner from the same date.
This will have an impact on how practitioners handle lease
extensions, especially where the flat is the subject of an
impending sale.
Judicial Review of LFRA 2024
Ironically the day before the implementation of the first
implementation above, on 30 January 2025 a hearing at the Royal
Courts of Justice granted permission for a group of six landlords
permission on all grounds to apply for Judicial Review of the LFRA
2024 on the grounds that it is incompatible with the Human Rights
Act 1998.
It is expected that the full hearing shall be heard in around
July 2025. This casts further significant doubt in relation to the
proposed amendments and whether they shall ever be implemented.
It can certainly be seen how effectively abolishing marriage
value and significantly wiping away a landlord’s portfolio
valuation could breach the right to property and we shall therefore
await a result with bated breath.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.