Leasehold and Freehold Reform Act: what you need to know

From 3 March 2025, key parts of the Leasehold and Freehold Reform Act 2024 come into effect, making it easier for leaseholders in England and Wales to take control of their buildings through the Right to Manage (RTM).

The Government has said these measures are intended to “improve the lives of millions of existing leaseholders”, by making it easier for leaseholders to take over management of their building.

What is the right to manage?

The RTM gives leaseholders the right to take over management of their building without first buying the freehold. This means they can manage services such as repairs, maintenance, and insurance. RTM is exercised through a company formed by the leaseholders and does not require the landlord’s consent, although there are qualification criteria.

What are the key provisions of the Act?

Section 49 of LFRA raises the non-residential limit for RTM claims from 25% to 50%. This means buildings with up to half their total floor area used for non-residential purposes can now qualify for RTM. It is a significant change likely to bring many more buildings within RTM scope. Properties previously disqualified because commercial space exceeded 25% may now qualify as long as residential space remains at 50% or more.

A new cost regime for RTM claims

Sections 50 to 52 introduce a new cost regime for RTM claims and shift compliance jurisdiction to the First-tier Tribunal (FTT) or, in Wales, the Leasehold Valuation Tribunal. Previously, RTM companies were liable for all costs resulting from a claim notice. The new rules change this so that RTM companies and their members are not liable for landlords’ costs unless ordered by a court or tribunal. However, RTM companies will still be responsible for landlords’ costs where they withdraw their claim or act unreasonably. Landlords can no longer recover non-litigation costs from non-participating tenants through service charges.

Section 64 of LFRA prohibits landlords from recovering non-litigation costs in RTM claims through service charges. It also transfers enforcement responsibilities from the County Court to the FTT. If the FTT orders enforcement, the County Court can only enforce it against third parties if it is not a money order.

Changes to voting rights within RTM companies

As well as the changes to voting rights within RTM companies, new model articles for RTM companies are being introduced from 3 March 2025. landlords’ votes will be capped at one-third of the total votes exercised by qualifying tenants. This change limits landlords’ influence, even if they own multiple flats in the building, and is intended to prevent a mixed-use building being ultimately controlled via the RTM Company by the people from whom the right to manage has been claimed.

More changes to come?

Only some parts of LFRA are coming into force in March. These include the removal of the two-year qualifying period for lease extensions and freehold purchases, some building safety measures, and the RTM provisions discussed here. Major reforms, such as the ban on selling leasehold houses, service charge reforms, and changes to the enfranchisement regime, remain pending. A judicial review of some reforms is ongoing, and the Leasehold and Commonhold Reform Bill, expected this parliamentary session, has yet to be published.

Here to support you

The implementation of the RTM reforms mean stakeholders should prepare for new processes and potential disputes around leasehold property rights. Attwaters can help leaseholders and landlords to familiarise themselves with the changes and consider how they may be affected.