Leasehold and freehold reform act replaces certainty with uncertainty

The Association of Leasehold Enfranchisement Practitioners (ALEP) has raised concerns about the Leasehold and Freehold Reform Act 2024, passed on 24 May 2024, describing it as a source of uncertainty rather than clarity. In a recent poll, 94% of ALEP members felt the Act would have benefited from more parliamentary scrutiny, while 60% believe a subsequent Leasehold Bill is necessary.

Announced in last November’s King's Speech and fast-tracked through Parliament, the Act's provisions are not yet in force. ALEP members highlighted the need for further legislative action, with some pointing to significant omissions in the current Act. Mark Chick, an ALEP director, noted that the upcoming general election on 4 July would influence the future of leasehold reform, depending on the elected government's priorities.

The Act includes measures such as banning leasehold houses and abolishing marriage value but lacks detailed implementation timelines. Mark Chick emphasised the challenge of bringing the Act into effect, suggesting that simpler reforms might be enacted before more complex valuation changes.

The Conservative Party's manifesto commits to capping and eventually reducing ground rents, while Labour promises to end the leasehold system, adopting Law Commission proposals. ALEP members are concerned about the limited scope of the current reform and potential Human Rights challenges due to unaddressed freeholder rights.

The period of uncertainty between the Act's Royal Assent and its enforcement is particularly troubling. ALEP members expressed frustration over unclear deferment and capitalisation rates, leading to a "limbo" for tenants and landlords. Mark Chick concluded by advocating for further reform and collaboration with the new government to achieve balanced outcomes for both leaseholders and freeholders.

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