Important legal update for leaseholders, freeholders and managing agents...
The Leasehold and Freehold Reform Act 2024 (the ‘2024 Act’) was given Royal Assent on 24 May 2024 but many of its provisions are not yet in effect. Some changes are expected to come into effect in 2025, while others may not come into effect until 2026 or 2027 (or beyond).
The legislation has introduced significant changes for leaseholders who (amongst other things) are looking to extend their leases under the Leasehold Reform Housing and Urban Development Act 1993 (‘1993 Act’) and bring Right to Manage Claims pursuant to the Commonhold and Leasehold Reform Act 2002 (‘2002 Act’).
So which reforms have already come into effect?
Immediate Eligibility for Lease Extensions
Previously, leaseholders were required to own their property for at least two years before being eligible to extend their lease under the 1993 Act. As of 31 January 2025, this two-year ownership requirement has been abolished. Now, leaseholders can initiate the lease extension process immediately upon acquiring their property, providing greater flexibility and control over their homeownership.
Right to Manage Claims
The qualifying criteria for bringing a Right to Manage claim pursuant to the 2002 Act has been changed. The following changes came into effect on the 3rd March 2025:
- The Right to Manage company (i.e. set up by the leaseholders) will generally no longer need to pay the freeholder's legal fees when making an RTM claim (but note point 3. below).
- Section 49 of the 2024 Act:
Premises will not qualify for RTM where the internal floor area of any non-residential parts exceeds 50%. Previously a claim could not be brought if the internal floor area of the non-residential areas within the relevant block exceeded 25%. This means that there are a number of residential blocks where an RTM claim can now be brought, whereas previously it couldn’t.
- Section 50 of the 2024 Act:
Under the previous legislation, the RTM Company would be liable for the ‘reasonable costs’ of the landlord (including the cost of any proceedings if the RTM Company’s application is unsuccessful). The updated legislation provides that the only exception to this is where the First-Tier Tribunal awards costs (only available if the claim is withdrawn or ceases to qualify, and other conditions are satisfied).
- Section 64 of the 2024 Act:
Under the old legislation a landlord can charge costs incurred in relation to the RTM claim to the service charge account if the lease permits it (subject to section 19 of the Landlord and Tenant Act 1985). The updated legislation provides that the landlord cannot charge leaseholders who are not members of the RTM Company the non-litigation costs incurred in relation to the RTM claim via the service charge account.
- Section 51 of the 2024 Act:
Under the previous legislation a landlord or the RTM Company can apply to the County Court for an Order to require any person to make good a default under the 2002 Act after 14 days has passed from the service of a default notice. The updated legislation provides that the First-Tier Tribunal will be the correct forum to bring a default action.
- Section 52 of the 2024 Act:
Where the First-Tier Tribunal has jurisdiction, it is not now possible to apply to the High Court for a determination in the first instance.
- RTM Model Articles:
The RTM Model Articles have been amended by The RTM Companies (Model Articles) (England) (Amendment) Regulations 2025. The main amendment is to place a cap on the total number of votes that can be exercised by member landlords.
This is a complex area of law and so if you are thinking about commencing a Right to Manage Claim under the 2002 Act or a Statutory Lease Extension claim under the 1993 Act, please feel free to contact our leasehold enfranchisement team, who will be happy to assist.
Email reception@odt.co.uk who will allocate your enquiry directly to a solicitor.