Leasehold and Freehold Reform Act 2024 sections in relation to the Right to Manage to come into force today (3 March 2025)
On the 6 February 2025, the Ministry of Housing signed a statutory instrument, The Leasehold and Freehold Reform Act 2024 (Commencement No. 3) Regulations 2025, which brings into force additional sections of the Leasehold and Freehold Reform Act 2024 (LAFRA) on 3 March 2025. The relevant sections make several significant changes to the right to manage (RTM) disputes, and their impact is explored below.
The Government has also made regulations, namely the RTM Companies (Model Articles) (England) (Amendment) Regulations 2025 (and the equivalent for Wales) which, from 3 March 2025 amend the model articles for RTM companies.
The Changes
The changes brought in on 3 March 2025 include the following:
- Section 49 of LAFRA amends the Commonhold and Leasehold Reform Act 2022 (the CLRA). The right to manage will now be available in mixed-use premises where the internal floor area used (or intended to be used) for non-residential purposes does not exceed 50% of the buildings total internal floor area (excluding common parts). This amend is intended at giving more leaseholders the option to pursue a right to manage.
- Section 50 of LAFRA also amends the CLRA and provides for a new costs regime for RTM claims in which each party generally bears its own costs associated with the claim (except in specific circumstances). This departs from the previous position in which RTM company's have been responsible for all costs incurred as a consequence of service of the claim notice. The amend will lessen the financial burden imposed on leaseholders wanting to make a claim to exercise management.
- Section 51 of LAFRA amends the CLRA so that the First Tier Tribunal is the appropriate forum for a dispute relating to compliance with the exercise of the right to manage.
- Section 64 of LAFRA prohibits the recovery via the service charge by landlords of non litigation costs incurred in connection with RTM claims. This provision further seeks to alleviate financial barriers faced by those considering exercising their right to manage.
- The model articles for RTM companies cap the votes exercised by landlords under leases of the whole or part of the premises to one third of the votes exercised by qualifying tenants. This will have the effect of diluting the landlords influence in the RTM company.
The Government's objective here is broadly in line with the Leasehold and Freehold Reform Bill impact assessment produced in 2023, which identified streamlining the process of allowing leaseholders to exercise the 'right to manage' as a key policy objective.
Taken together, the sections being brought into force and the amended model articles will create a situation where more leaseholders are able to exercise the right to manage, whilst also ensuring that doing so is less financially prohibitive.
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.
