Leasehold And Freehold Reform Act 2024 – What Changes Have Come Into Play?

The Leasehold and Freehold Reform Act 2024 ("the Act") became law on 24 May 2024.

Despite the Act now being law, its commencement is taking a staggered approach with different parts of the Act becoming binding at different times. This is due to the many of the sections of the Act needing either of the following, before they can become binding:

1. Secondary legislation to implement the sections (ie legislation made by a government minister or authorised body rather than Parliament, to detail how the section will actually apply/take effect), or
2. Secondary legislation and further detail to be added to the sections in the Act.

The current law remains until commencement of each of the sections.

However, a small number of sections of the Act became law automatically on 24 July 2024. These sections are:

1. Section 113 under Part 7 (relating to rent charges).
2. Sections 117, 118 and 119 under Part 8 (relating to building safety).

Each section is dealt with below.

Section 113 – Inserts new sections 120A, 120B, 120C, 120D and 122A into the Law of Property Act 1925 ('LPA')

Section 120A

Deals with interpretation.

• Provides that a rentcharge is regulated (for the purposes of sections 120B to 122 LPA) if it is one which cannot be created in accordance with section 2 Rentcharges Act 1977 ('RA').
• Provides definitions which apply to sections 120B – 120D.

Section 120B

Deals with notice of arrears in relation to regulated rentcharges.

• Provides circumstances in which action to recover or compel payment of regulated rentcharge arrears cannot be taken.
• Sets out what a demand for payment for regulated rentcharges must include.
• Outlines what information must be served with a demand for payment for a regulated rentcharge and in what circumstances.
• Provides that no sum is payable by the landowner in relation to preparation or service of a demand for payment of a regulated rentcharge. Includes obtaining/preparing documents/copies.

Section 120C

Deals with service of notice of demand for a regulated rentcharge under section 120B.

• Provides circumstances when a notice under section 120B is sufficiently served.

Section 120D

Deals with administration charges in relation to rentcharge arrears.

• Provides that the Secretary of State may limit the amount payable by landowners in respect of action to recover payment of regulated rentcharges.
• Inserts section 121(1A) into section 121 LPA, providing availability of remedies for recovering/compelling payment of the regulated rentcharge on and after 27 November 2023.
• Inserts section 122(1A) into section 122 LPA LPA, providing when a rentcharge (or other annual sum) may not be granted, reserved or created out of or on another rentcharge if regulated, on and after 27 November 2023.

Section 122A

Provides that any instrument creating a rentcharge, contract or any other arrangement (whenever entered into), is of no effect to the extent it is contrary to sections 120B, 120C, 121(1A) or 122(1A) LPA.

Section 117 – Amends section 9 of schedule 8 Building Safety Act 2022 (BSA)

Section 9 BSA deals with building advisory committee.

• Details the circumstances within which section 9(1) BSA does not apply – namely when service charge is payable to a management company in respect of legal (or other professional services) provided to a company in connection with an application (or possible application) relating to a remediation contribution order under section 124.
• Provides a definition of 'management company'.
• Provides a definition for 'resident management company'.

The amendments made under section 117 do not apply in relation to legal or other professional services provided before this section comes into force.

Section 118 – Amends section 125 Building Safety Act 2022

• Section 118 repeals section 125 Building Safety Act 2022 which previously dealt with meeting remediation costs of an insolvent landlord.

Section 119 – Inserts a new section 125A into the Building Safety Act 2022, which deals with notifications by insolvency practitioners

• Applies if an insolvency practitioner is appointed in relation to a responsible person for a higher-risk building or relevant building.
• Defines when a person will be a responsible person for high-risk building or a relevant building.
• Outlines information in section 125A(6) which must be given to the relevant local authority and relevant fire and rescue authority. Outlines when this information under must also be given to the relevant regulator and provides the timeline within which the information must be provided.
• Defines insolvency practitioner and provides relevant definitions.

Please note that this summary does not attempt to summarise in full the changes introduced by the Leasehold and Freehold Reform Act 2024 and should not be relied upon; the Act itself should be referred to. If you have any questions surrounding this act, please contact a member of our Property Team.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.