Your Guide To Freehold Purchase Legislation
With all the talk around Freehold and Leasehold Reform throughout 2024, it can be hard to understand if any freehold purchase legislation has changed or is changing. That’s where we can help. We’re regularly checking in with and contributing to the state of freehold purchase law in the UK, as helping leaseholders buy their freeholds is what we do.
So, in this guide, we’ll take a look at current freehold legislation in the UK, and if any changes are actually in the pipeline with the recent push for reform in the sector.
What is Freehold Purchase Legislation?
Freehold purchase refers to the process where leaseholders buy the freehold of their property, giving them full ownership of the land and building. In the UK, freehold purchase legislation governs this process, ensuring leaseholders have a legal framework to acquire greater control over their property, avoid ground rent, and eliminate leasehold restrictions.
Many leaseholders seek to buy the freehold of their building to escape rising costs or onerous terms tied to their leases. The process often involves collective enfranchisement, where multiple leaseholders in the building come together to buy their freehold. This requires agreement among leaseholders, valuation, and negotiations with the freeholder.
Freehold purchase legislation is crucial to guide this complex process, helping to uphold fairness, create transparency, and a clear pathway to resolve disputes along the way.
Current Freehold Purchase Legislation in the UK
The primary legislation governing freehold purchase in the UK includes:
- Leasehold Reform Act (1967)
- Leasehold Reform, Housing and Urban Development Act (1993)
- Commonhold and Leasehold Reform Act (2002)
- Ground Rent Act (2022)
- Leasehold & Freehold Reform Act (2024)
These laws collectively regulate the eligibility, valuation, and procedure for leaseholders to acquire their freehold.
Leasehold Reform Act 1967
The Leasehold Reform Act 1967 is the original legislation granting qualifying leaseholders of houses in England and Wales the right to purchase the freehold of their property, a process known as “enfranchisement.”
Key regulations under this Act relate to:
- Eligibility Criteria (Type of Property, Lease Conditions, Leaseholder Qualifications)
- Valuation and Pricing
- Procedural Steps
- Costs & Legal Fees
It’s important to note that the Leasehold Reform Act 1967 has undergone several amendments, in theory to simplify the enfranchisement process and expand leaseholder rights.
Leasehold Reform, Housing and Urban Development Act 1993
The Leasehold Reform, Housing and Urban Development Act 1993 grants leaseholders of flats in England and Wales the right to collectively purchase the freehold of their building through a process known as “collective enfranchisement.”
Key regulations under this Act relate to:
- Eligibility Criteria (Qualifying Tenants and Building Requirements)
- Collective Enfranchisement Process
- Apportionment of Costs and Premium Calculation
- Post-Purchase Rights and Obligations
Commonhold and Leasehold Reform Act 2002
The Commonhold and Leasehold Reform Act 2002 introduced significant changes to property ownership in England and Wales, particularly relating to the purchase and management of freehold properties. Key provisions include:
- Introduction of Commonhold
- Right to Manage (RTM)
- Leasehold Enfranchisement Reforms
- Ground Rent Regulations
These reforms aimed to provide leaseholders with more control over their properties and promote the adoption of commonhold as an alternative to leasehold ownership. However, despite the introduction of commonholds, its uptake has been limited.
Ground Rent Act 2022
The Ground Rent Act 2022 primarily addresses ground rents in new long residential leasehold properties in England and Wales by abolishing ground rents for new leases. It does not directly govern regulations related to the purchase of freehold properties.
Leasehold & Freehold Reform Act 2024
The Leasehold & Freehold Reform Act 2024, though passed, is mostly not yet in force, and aims to streamline the process further. It introduces significant changes to property ownership laws in England and Wales, particularly concerning leasehold properties.
Key provisions related to freehold purchase and leasehold reform include:
- Extended Lease Terms
- Abolition of Marriage Value
- Immediate Eligibility for Lease Extensions
- Standardization and Transparency in Costs
While the Act received Royal Assent in May 2024, many of its provisions require secondary legislation and are likely to come into force between 2025 and 2028.
Proposed Changes and Reforms to Freehold Purchase Legislation in 2025
In 2025, the UK government is continuing its push for reforms to freehold purchase legislation, building on the 2024 Leasehold & Freehold Reform Act. These reforms aim to make freehold purchases easier, quicker, and more affordable while addressing long-standing criticisms of the leasehold system. Key proposals include:
- Banning ground rents entirely for new leasehold houses
- Simplifying the enfranchisement process for leasehold flats
- Introducing fairer, more transparent valuation methods to reduce costs for leaseholders
- Increase the standard lease extension term to 990 years
Currently, these changes are at the proposal stage, with many further consultations and legislative discussions planned. If passed, the reforms could significantly benefit leaseholders by reducing barriers to purchasing their freehold and ending exploitative practices.
However, concerns remain about delays in implementation, the potential complexity of transitioning existing agreements, and whether the reforms will go far enough to meet public expectations. For now, leaseholders remain cautious, as meaningful change has often been slow in this area.
Closing Thoughts: Staying Informed
Staying informed about legislative updates is crucial, as changes could significantly impact your rights and opportunities as a leaseholder. Be proactive and prepared to act on new developments.
At TFC, we specialize in helping leaseholders buy their freehold. If you have questions or need professional assistance, our team is here to help.
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FAQs
What is the Freehold Act 2024?
The Leasehold and Freehold Reform Act 2024 is a piece of freehold purchase legislation proposed but not yet in practice in the UK to simplify and streamline the process for leaseholders to purchase the freehold of their property. This leasehold and freehold bill aims to reduce costs, make valuations fairer, and improve the rights of leasehold property owners.
Do I have a legal right to buy my freehold?
Yes, in many cases, leaseholders have a legal right to buy their freehold under UK law, provided they meet certain eligibility criteria. These criteria typically include the property type, length of lease, and ownership details.