Leasehold Reform, Enfranchisement and Resident Management Rights
The rights landscape
The Leasehold Reform Act 1967 gives house tenants enfranchisement or extended leases. The Leasehold Reform, Housing and Urban Development Act 1993 gives flat owners two key rights: a lease extension of 90 years at a peppercorn rent (qualifying flat, original term over 21 years, two years' ownership), with a premium reflecting the diminution in the landlord's interest plus 50% of marriage value; and collective enfranchisement, requiring a self-contained building with at least two flats, qualifying tenants of at least two-thirds of flats participating, no more than 25% of internal floor area in non-residential use, and the two-year ownership rule.
The Commonhold and Leasehold Reform Act 2002 created the right to manage: no premium, no ownership qualifying period, an RTM company whose membership includes qualifying tenants of at least half the flats, the same 25% non-residential limit, and at least two flats. RTM transfers management functions - not the freehold, and not the landlord's reversion.
Recent reform must be handled carefully. The Leasehold Reform (Ground Rent) Act 2022 bans financial ground rents on most new long residential leases granted after 30 June 2022. The Leasehold and Freehold Reform Act 2024 will, once commenced, remove marriage value, introduce 990-year extensions, remove the two-year rule and raise the non-residential limit to 50% - but commencement is gradual, so never assume a provision is in force. The Building Safety Act 2022 provides leaseholder protections for qualifying leases.
Traps: applying 2024 Act changes that are not yet in force; confusing the RTM thresholds with enfranchisement thresholds; forgetting marriage value is only payable where the lease has 80 years or less unexpired.
Rule of thumb: for every reform question, state the regime, the qualifying criteria and whether the provision is in force.