Following the ministerial statement by Matthew Pennycook, the Minister of State for Housing and Planning, on 21 November 2024, we have more information regarding the timetable for the implementation of the reforms in the Leasehold and Freehold Reform Act 2024 (LAFRA).
As to Part 2 of LAFRA, which makes it easier and cheaper for residential leaseholders to extend their lease or to buy their freehold, the two-year ownership requirement to be a qualifying leaseholder is to be abolished in January 2025. Our recent bulletin detailing further information regarding the timetable affecting Part 2 can be found here: Enfranchisement reform – a more considered approach but with further delay | Trowers & Hamlins law firm.
The statement has confirmed that the right to manage provisions contained in Part 3 will be brought into force in spring 2025. Part 3 of LAFRA includes, amongst other things, provisions which will result in more buildings qualifying for the right to manage, due to the increase of the permitted commercial property element of mixed-use buildings from 25% to 50%.
Mr Pennycook goes on to state that the service charge reforms (contained in Part 4) will be consulted on in 2025, with a view to bringing "these measures into force as quickly as possible thereafter". These reforms are aimed at increasing transparency and empowering tenants to hold landlords to account. The key provisions are:
- Extension of a limited form of regulation of fixed service charges;
- Prescribed forms of service charge accounts and annual reports;
- New rights to request information relating to service charges from landlords;
- Effectively banning insurance commissions for landlords;
- Limiting landlords' rights to claim legal costs of Tribunal proceedings from tenants; and
- Introducing a new right for tenants to claim their legal costs of Tribunal proceedings from landlords.
The statement confirms that the Government will go out to consultation "very shortly" on the detail of banning buildings insurance remuneration, such as commissions for landlords, property managing agents and freeholders being charged through the service charge.
The statement also refers to Part 5 of LAFRA. The estate management provisions in Part 5 aim to protect residential freeholders on private and mixed-tenure housing estates from unfair estate management charges, including providing homeowners with the right to apply to the First Tier-Tribunal to determine whether the charges are payable and, if so, to whom and the amount. Mr Pennycook has stated that the Government will seek to consult on implementing Part 5 in 2025.
Although the statement does provide a general timetable of expected progression of the various parts of LAFRA, the practical implementation remains to be seen and much is subject to further consultation.
