Leasehold and Freehold Reform Act 2024: What RTM Directors Need to Know
The Leasehold and Freehold Reform Act 2024 is the most significant change to residential leasehold law in a generation. It received Royal Assent in May 2024, but most of its provisions are not yet in force — they need commencement orders or secondary legislation before they take effect. This matters if you are running a Right to Manage company or residents' management company, because some changes already affect how you operate, and others are on their way.
This guide sets out what has already changed, what is still pending, and what each change means in practice.
This applies to England and Wales. It is general guidance, not legal advice.
What is already in force
The two-year residency rule is gone (January 2025)
Before February 2025, a leaseholder had to have owned their flat for at least two years before they could extend their lease or buy the freehold. Section 27 of the 2024 Act abolished that requirement. Leaseholders can now exercise these rights from day one.
For RTM and RMC directors, this matters indirectly: newly purchased flat owners in your building now have immediate rights to participate in collective enfranchisement if leaseholders want to buy the freehold collectively.
Right to Manage is easier to claim (March 2025)
Section 49 of the 2024 Act raised the non-residential floor area threshold for Right to Manage from 25% to 50% of the building. This came into force on 3 March 2025.
Practical effect: blocks with ground floor shops, offices, or commercial units can now claim RTM if commercial space is less than half the total floor area. Many mixed-use buildings that were previously excluded now qualify. If a group of leaseholders previously explored RTM but were told their building did not qualify because of a commercial unit, that calculation may have changed.
Leaseholders no longer pay the freeholder's costs in RTM claims (March 2025)
Sections 87A and 87B of the Commonhold and Leasehold Reform Act 2002 (inserted by the 2024 Act, in force from 3 March 2025) changed the cost position for RTM claims significantly. Previously, leaseholders pursuing RTM often had to pay the freeholder's professional costs of dealing with the claim — solicitor fees and surveyor fees. These could run to several thousand pounds.
The 2024 Act removed that obligation for uncontested claims. Now each party generally bears its own costs, unless a tribunal orders otherwise. If the freeholder contests the claim and the RTM company withdraws, some cost liability can still arise — but the standard uncontested path is now much cheaper.
This is a material change for groups considering RTM. The historic cost deterrent has been substantially reduced.
What is not yet in force
The majority of the 2024 Act's provisions have not yet been commenced. The government needs to pass secondary legislation — statutory instruments and commencement orders — before most reforms take effect. As of mid-2026, the following remain pending:
Service charge transparency
Part 4 of the Act includes new rules on service charge transparency: standardised demand formats, annual service charge reports, and administration charge disclosure. These provisions require regulations specifying exactly what information must be provided and in what format.
A government consultation on service charges and managing agent regulation closed in September 2025. Secondary legislation to bring these provisions into force had not been made as of mid-2026. When they do come into force, they will affect how RTM companies and RMCs issue demands and report to leaseholders.
Insurance commission restrictions
Sections 59-60 of the Act would restrict the insurance commissions that landlords and managing agents can recover through service charges, replacing them with defined "permitted insurance payments." These provisions are also prospective — they have not yet been commenced.
Separately, the FCA introduced rules in 2024 requiring insurers and brokers to stop paying commissions that do not provide fair value to leaseholders. Those FCA rules are already in effect and do not require a commencement order. The legislative restrictions under the 2024 Act are an additional layer, not yet in force.
Extended lease terms
The Act would change the standard lease extension term from 90 years to 990 years, and reduce ground rent to a peppercorn on extension. These provisions require secondary legislation setting the valuation method — not yet in place.
Ground rent restrictions and the Commonhold Bill
A separate draft Commonhold and Leasehold Reform Bill, published in January 2026, proposed banning new leasehold flats and introducing a ground rent cap. This is still at the consultation and legislative drafting stage — it is not yet law.
What this means for RTM directors in practice
Running an RTM company or RMC does not change materially from the already-in-force provisions, except on two points:
1. If your block never qualified for RTM before: Check the non-residential threshold again. If your building's commercial floor space is between 25% and 50% of the total, RTM is now available. See our guide on how the Right to Manage process works and the costs involved in making a claim — covered in our guide to RTM costs.
2. If you are running an existing RTM company: Your obligations under the Landlord and Tenant Act 1985 — service charge demands, Section 20 consultation for major works, 18-month rule for cost recovery — are unchanged. The transparency reforms under the 2024 Act will add disclosure requirements when they are commenced, but you do not need to change what you do today.
3. On insurance: Even before the legislative provisions come into force, the FCA rules mean your buildings insurer and any broker involved in placing your block's policy should be operating under fair-value requirements. Leaseholders are entitled to request a summary of the insurance cover and may challenge the cost through the First-tier Tribunal under the existing Landlord and Tenant Act 1985 Schedule. Our guide on buildings insurance for blocks of flats covers this in detail.
Staying current
The 2024 Act is being implemented in stages. The most reliable way to track which provisions are in force is the version of the Act on legislation.gov.uk — the status column shows each section's commencement date or marks it as prospective.
For RTM and RMC directors, the changes already in force are the meaningful ones today. The pending transparency and insurance reforms will create new disclosure obligations when they arrive — worth monitoring, not urgently preparing for.
LevyBoard is designed for volunteer RTM and RMC directors — built around the obligations you have now, with updates as the reform programme progresses.
This guide covers provisions of the Leasehold and Freehold Reform Act 2024 affecting residential leasehold management in England and Wales. This is general information, not legal advice. The Act is being implemented over time — check legislation.gov.uk for current commencement status of specific provisions.
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