Following his November 2024 statement, the Minister for Housing and Planning is sticking to his promises and starting to bring into force various provisions of the Leasehold and Freehold Reform Act 2024 (LFRA 2024).

These changes have been brought into effect within the government's projected timescales, signifying its commitment to the ongoing reforms. That said, with landlords and freeholders having now been granted leave to apply for judicial review of some LFRA provisions, it remains to be seen whether the remaining reforms proposed by the LFRA will be subject to further change.

End of two-year qualifying period to extend leases / purchase freehold 

In January, commencement regulations brought into force section 27 LFRA (on 31 January), removing qualifying criteria to extend leases, or purchase freeholds, such that tenants no longer need to have owned their property for two years. However, tenants commencing a claim will need to be registered at the proprietor of their lease, so any Land Registry delays in completing an application to register their lease will impact upon the time from which the tenant can commence a claim. 

Right to Manage Regime 

The Right to Manage (RTM) regime allows some residential leasehold property owners to take over management of the building in which their property sits. These powers are contained in the Commonhold and Leasehold Reform Act 2002 (CLRA 2002). Further LFRA commencement regulations published on 6 February will bring into force the following changes to the RTM regime from 3 March.

Change of non-residential limit on RTM 

From 3 March, an RTM claim can be made in relation to buildings with up to a 50% non-residential element (the previous threshold being only 25%). This will bring a large number of buildings within the scope of RTM which would previously not have qualified. 

Changes to costs position for RTM claims 

As it stands under the CLRA 2002, an RTM company is liable for all costs of the landlord or any management company in dealing with a claim for RTM. The recent amendments mean the starting point will shift so that an RTM will not be liable for any landlord / management company costs except in certain circumstances. These include: 

• where a court or tribunal has the power to order the RTM to pay costs, and it makes such an order; and
• where the claim notice to acquire the RTM is withdrawn, deemed withdrawn or ceases to have effect and the RTM company acts unreasonably in giving a claim notice or not withdrawing it sooner.

Even in the latter circumstances, the costs need to have been reasonably incurred. 

This will likely lead to landlords being unable to recover most if not all of their legal costs when considering the validity of an RTM claim unless the claim is withdrawn or invalid, and the RTM company has acted unreasonably.

Jurisdictional changes

From 3 March, the First Tier Tribunal (as opposed to the County Court) will be given jurisdiction to enforce the obligations of a party in relation to a RTM claim. 

Changes to New model articles for RTM companies 

The government has also laid down regulations (alongside the regulations amending the RTM regime) limiting the rights in the RTM company available to freeholders and intermediate landlords to an overall cap of 1/3rd of the votes exercisable by qualifying tenants. This will prevent landlords (from whom the RTM has been claimed, and who may hold a number of flats in the building and therefore qualify as part of the RTM company) from ultimately controlling the management of a property via the RTM.