The Association of Leasehold Enfranchisement Practitioners (ALEP) carried out a member poll and found that 94% of respondents would have liked the act to undergo more scrutiny and be given more time before passing.
The Leasehold and Freehold Reform Bill was one of the last to be rushed through Parliament before the dissolution of Government ahead of the general election.
Although it is now law, it may take a while to come into effect.
The act passed without the promised cap on ground rent but included measures to make it easier and less costly for leaseholders to extend their leases to 990 years and challenge unreasonable charges.
The ALEP survey found that 60% of leasehold practitioners felt the Government would need to put forward an additional Leasehold Bill to address the gaps in the current act.
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Two-fifths said it was “too early to say” whether changes would be needed, but none of ALEP’s members felt the law had passed satisfactorily.
Leasehold changes dependent on next Government
Mark Chick, director of ALEP, said: “Whether a second bill is imminent will be dependent on the choice that the country makes on 4 July. The Leasehold and Freehold Reform Act 2024 marks a determined commitment in the dying breaths of this last session of Parliament for the Conservative Government to honour some manifesto commitments – notably, the banning of leasehold houses and the ‘abolition’ of marriage value.
“Whilst the 2024 act is now on the statute books, none of its main provisions as regards enfranchisement are yet in force and it will take secondary legislation – as the act itself envisages – to bring many of these into effect.”
Chick said those affected would want more guidance on the likely timelines for the act and said it was “very difficult at this stage to hazard a guess as to when this may be”.
He added: “It is quite likely that some of the proposed reforms, such as the abolition of the ‘two-year rule’ and the restriction on claims being brought within a year of withdrawal along with the proposed changes in relation to landlords’ costs might well make it into force sooner than some of the proposed valuation reforms which will need more detailed regulations to bring them into effect.
“However, we will have to ‘wait and see’ what… Thursday brings before being able to speculate further.”
A state of limbo for leaseholders
Both main political parties suggested the gaps in the act would be addressed.
In its election manifesto, the Conservative Party said it would “complete the process of leasehold reform including capping ground rents at £250 and reducing them to peppercorn over time”, while Labour proposed to “act where the Conservatives have failed and finally bring the feudal leasehold system to an end”.
Labour said it would implement the proposals made by the Law Commission on leasehold enfranchisement, right to manage and commonhold, making commonhold the default tenure and banning new leasehold flats.
Members of ALEP noted that the previous Conservative Government did not include all of these recommendations but acknowledged there were time constraints.
Members said the issue of deferment and capitalisation rates had not been considered, with one saying this created “a difficult period of limbo for tenants and landlords alike”.
The deferment rate is the compensation a tenant pays to a landlord when extending the lease. The capitalisation rate is the discount applied for each year the ground rent is due in the future.
Respondents also expressed concern around the uncertainty in the time between the law entering the Statute Book and taking effect.
One said: “It is unsatisfactory that the act has received royal assent… [but] it is still very unclear if/when the various sections of the act relating to leasehold enfranchisement will actually come into force.”
Chick said: “Our members are not unanimous in their keenness for the Law Commission’s 841-page report with its 102 recommendations to be acted upon in full, but the vast majority, myself included, see potential for further reform.
“Regardless of the outcome of the general election, we hope to work with the Government to achieve a satisfactory outcome for leaseholders and freeholders alike.”
Related: ‘Fairer deal’ proposed for shared ownership under leasehold reform
This article first appeared on our sister site, Mortgage Solutions, here.
