Direction of travel: consultation on implementation of the Leasehold and Freehold Reform Act 2024

The Government launched a consultation earlier this summer, seeking views on how to implement the provisions of Part 4 of the Leasehold and Freehold Reform Act 2024 (LAFRA) via secondary legislation.

The consultation also seeks views on new proposals for reform, including updates to the major works regime under the Landlord and Tenant Act 1985 (the 1985 Act). Whilst no consultation has yet been released on the implementation of Part 5 of LAFRA, it contains a similar duty to consult freehold homeowners subject to estate charges and so it seems likely that the responses to this consultation will inform the Government’s thinking for the next stage.

Part 4: Regulation of Leasehold

Part 4 focusses on the regulation of leasehold management primarily regarding service charges and seeks to overhaul the existing provisions in the Landlord and Tenant Act 1985 (LTA 1985). It is proposed that:

• section 20B notices (18-month rule notices) are in a prescribed form
• service charge demands are in a prescribed form
• information that leaseholders previously had a right to request (pursuant to sections 21 and 22 of the LTA 1985 Act) must now be provided as a matter of course

Failure to comply with these provisions will give leaseholders rights to apply to the First Tier Tribunal (FTT) to enforce compliance, and damages of up to £5000 may be awarded against landlords. Part 4 also seeks to curtail the costs a landlord can recover from leaseholders as part of FTT proceedings and recovery will not be as of right even where a lease permits recovery.

The second section of this consultation considers raising the consultation threshold under the 1985 Act for qualifying works to £600 per leaseholder (currently £250 per leaseholder), and for qualifying long term agreements to £300 per leaseholder (currently £100 per leaseholder).

Part 4 seeks to assist leaseholders in their understanding of leasehold management, perhaps as a precursor to the eventual transition towards a full commonhold regime. The consultation on Part 4 of LAFRA notes that “opaque and affordable service charges” are the single biggest subject of enquiry among those seeking advice and support from the Leasehold Advisory Service. The Government is therefore hopeful that simplification and standardisation will help leaseholders better understand and challenge costs leading to better understanding of the system more generally.

One interesting proposal is taken from the Report of Lord Best in 2019 and pushes for a move towards  mandatory professional qualifications (and associated CPD) being introduced for managing agents,  both at individual and firm level.

For landlords, this additional regulation comes at a time when they (and their agents) may already be navigating the provisions of the Building Safety Act 2022, preparing for the Renters Rights Bill becoming law this Autumn, and ensuring their properties stay compliant with statutory requirements such as MEEs or HMO licencing.

What matters next

For housebuilders, perhaps the more interesting and relevant part of LAFRA is Part 5 which will limit recovery of estate management charges. As yet, there is no timetable for this Part being brought into force, but we anticipate that responses to this consultation will shape likely next steps and therefore housebuilders may well want to consider responding to the consultation.

Part 5: Regulation of Estate Management 

Part 5 seeks to create similar protections for freeholders who are obligated to contribute towards the costs of maintaining common areas as are afforded to leaseholders pursuant to the LTA 1985. Although the Leasehold Reform (Ground Rent) Act 2022 has already banned ground rents on most new long residential leases, Government remains concerned over the lack of regulation of estate management charges.

The provisions of Part 5 will require estate managers to issue annual accounts and reports in a prescribed format, supported by documentation such as invoices and receipts, as well as giving homeowners on managed estates enhanced rights to request information and challenge charges – mirroring the rights of leaseholders to challenge the reasonableness of service charge.

Part 5 also contains an obligation on estate managers to consult homeowners where costs will exceed an appropriate prescribed amount – similar to the consultation requirements required under s.20 of the LTA 1985.

Next steps

The Part 4 consultation is open for 12 weeks and closes on 26 September 2025. As always, it is important to remember that this is (as yet) only a consultation, and therefore not all of its proposals will make it into law.

It is however likely that whatever the outcome of the consultation, the winners will be those professional and proactive landlords (for example, of PBSA and BTR stock) who will be better placed to absorb the additional administrative burden.

Once the response from the Part 4 consultation is published, others involved in the living sector, such as housebuilders may find it particularly interesting to observe the overall direction being taken by Government, as the changes introduced at this stage could influence how subsequent parts of the Act are put into effect.