The Leasehold and Freehold Reform Act 2024 was introduced to make homeownership cheaper, fairer and more transparent.
Following consultation with leaseholders, landlords and industry groups, the government has confirmed it will proceed with a series of measures to increase transparency around service charge costs and rebalance the system.
The government is now set to introduce a series of measures to increase the transparency of service charges.
What Are The Changes?
The changes are set to come into force in 2027 implementing a new service charge demand form which will set out detailed information on payments required and what they will cover. You may recall complaints in recent years of excessive service charges being levied to leaseholders and on very poor terms.
These new, key reforms aim to give leaseholders greater control over their homes and their money, making it easier to see exactly what they are being charged for, understand how their service charges are being spent and challenge unfair costs when things go wrong.
Service charge information made clearer and legal costs regime rebalanced so that leaseholders are empowered to challenge unreasonable charges
Reforms to make it cheaper and easier for leaseholders to extend a lease or buy a freehold are a step closer to implementation
Part of the plan to support existing leaseholders as the government brings the feudal leasehold system to an end in this Parliament.
Coming into force as soon as possible from 2027, the changes include:
An annual report, which landlords will need to provide to leaseholders, giving a clear insight into the health and condition of their building and plans for major works.
A new service charge demand form, setting out detailed information about service charge payments and what they will cover.
Where disputes arise, such as over service charges, new rules will protect leaseholders from footing their landlord’s legal bills without challenge, and enable them to apply to recover their own costs.
Landlords will need to provide certain building information on request, such as fire safety information and invoices for maintenance works, going back up to six years and with clear timeframes for responses.
This action will rebalance the system, increase transparency over charges and help minimise the costs falling to leaseholders.
Leaseholders will also be able to challenge service charges knowing that they will be protected from having to pay the Landlord’s legal costs and can apply to recover their own costs should they be successful.
In addition Landlords will be required to provide Leaseholders with annual reports detailing the health and condition of the building and any plans for major works.
“acting to enable more existing leaseholders to take control of their buildings and more easily convert to commonhold as and when they judge the time is right for the, and we are strengthening protections for existing leaseholders in the here and now by driving up service charge transparency and rebalancing legal costs so that leaseholders are empowered to challenge unreasonable charges”.
Catherine Wilson adds: “It is timely that the leasehold system is reformed. There has been many criticisms of leaseholders getting a raw deal and being overcharged, or offered very bad termination of lease clauses. These reforms are welcomed and by making commonhold the new default tenure, the property rights of leaseholders ‘or commonholders’ can be further protected.”
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