Leasehold and Freehold Reform Act 2024: What Does It Mean for Leaseholders?

The Leasehold and Freehold Reform Act 2024 is now in effect, bringing significant changes aimed at improving the rights and protections of homeowners, particularly leaseholders. The new legislation introduces a series of reforms designed to make homeownership more affordable, transparent, and secure for those living in leasehold properties.

Key Provisions of the Leasehold and Freehold Reform Act 2024

The Act introduces several important changes that benefit leaseholders by:

1. Simplifying Lease Extensions and Freehold Purchases
   The process of extending a lease or buying the freehold of a property is now simpler and cheaper. This gives leaseholders more security and makes it easier to afford long-term housing.

2. Extending Lease Terms
   Standard lease terms for both flats and houses have been extended to 990 years. This is a major improvement over previous shorter terms, offering greater long-term stability for homeowners.

3. Greater Transparency in Service Charges
   Landlords are now required to provide clear, standardised billing for service charges. This makes it easier for leaseholders to understand and challenge any unreasonable fees they may be asked to pay.

4. Making It Easier to Challenge Unfair Charges
   The Act provides support for leaseholders looking to challenge unreasonable charges imposed by landlords. Leaseholders now have the right to take disputes to a Tribunal without the fear of excessive costs.

5. Improving Management of Buildings
   Leaseholders can now more easily select and appoint their own managing agents. This reform offers more control over the management and upkeep of their buildings, helping to ensure better service and value for money.

6. Removing Freeholders’ Legal Costs from Leaseholders
   Leaseholders will no longer be required to cover the freeholder’s legal costs when exercising enfranchisement rights. This eliminates a significant financial barrier that previously deterred many leaseholders from taking action.

7. Expansion of Redress Schemes
   Freeholders who manage buildings directly must now join a redress scheme, much like managing agents are required to do. This ensures that more homeowners can seek redress for unfair practices or poor management.

8. Streamlining the Buying and Selling of Leasehold Properties
   The Act sets new limits on the time and fees associated with buying or selling leasehold properties. This makes the process smoother and more affordable for prospective buyers and sellers.

9. Improved Rights for Homeowners on Private Estates
   Homeowners on private or mixed-tenure estates will benefit from enhanced rights of redress, along with greater transparency surrounding the charges they face for the upkeep of communal areas.

How Do These Reforms Benefit Leaseholders?

The Act brings several important benefits to leaseholders:

• Challenging Unfair Charges
  Leaseholders now have more power to challenge excessive service charges without the presumption that they must pay the freeholder’s legal fees. This removes a significant barrier that previously discouraged many from taking action against unfair practices.

• Transparency in Building Insurance
  The Act puts an end to non-transparent and inflated commissions on building insurance. Instead, only reasonable handling fees can be charged, offering more fairness to leaseholders.

• Freehold Over Leasehold for New Homes
  The Act bans the sale of new leasehold houses, meaning that most newly built homes in England and Wales will be sold as freehold. This marks a major shift towards ensuring homeownership without the restrictions of leasehold arrangements.

• No Minimum Ownership Period for Lease Extensions
  New leaseholders will no longer have to wait two years before they can extend their lease or buy the freehold. This opens up options for leaseholders to secure their homes earlier.

• More Opportunities to Take Control
  Leaseholders now have more opportunities to take over the management of their property, thanks to the raising of the commercial floor space limit from 25% to 50%. This change allows more leaseholders to exercise their Right to Manage or engage in collective enfranchisement.

Conclusion

The Leasehold and Freehold Reform Act 2024 marks a significant shift in housing law, particularly for leaseholders. By making processes simpler, more affordable, and transparent, the Act aims to provide greater security for homeowners and improve their ability to manage and protect their homes. If you're a leaseholder, these changes offer new opportunities to take control of your property and challenge unfair practices more easily. Seeking advice from a legal professional can help you navigate these reforms and make the most of the benefits they provide.

Understanding Care Proceedings in the UK: A Simple Guide

When a child's welfare is at risk, local authorities may step in to ensure their safety. This process is known as care proceedings. It can be a stressful and emotional time for families, so understanding how it works and what to expect can be helpful. Here's a straightforward guide to help explain the care proceedings process in the UK.

What Are Care Proceedings?

Care proceedings are court proceedings initiated by social services to protect a child who is believed to be at serious risk of harm. If the local authority (social services) is concerned about a child's safety or well-being, they can apply to the family court for permission to take action.

Why Do Care Proceedings Start?

Care proceedings are only initiated if social services have serious concerns about a child’s safety. This could be due to neglect, physical or emotional abuse, exposure to domestic violence, substance misuse by the parents or guardians, or other harmful situations. Social services will try to work with the family to resolve these issues before taking legal action, but if the concerns remain unresolved, care proceedings may be necessary.

Key Stages of Care Proceedings

The care proceedings process typically follows a structured path:

1. Pre-proceedings Meeting

Before going to court, social services may invite the parents or carers to a pre-proceedings meeting. This is an opportunity for the family to discuss concerns and try to agree on how the issues can be addressed. If the problems are resolved at this stage, court proceedings may be avoided.

2. Application to the Court

If social services believe the child is still at risk, they will apply to the court for an order. The application will outline the reasons for concern and what action they think is necessary to protect the child.

Social services can apply for two types of order. The first is an interim care order which is an order that temporarily places the child in the care of social services whilst proceedings are ongoing. Social services will obtain parental responsibility with this order and share this with the child’s parents.

The second order they may apply for is a supervision order imposes a duty on social services to 'advise, assist and befriend' a child.

3. First Hearing (Case Management Hearing)

Once the application is made, the court holds a Case Management Hearing within 12-15 days. At this hearing, the court will decide the next steps and set a timetable for the case. Social services, the parents or guardians, and the child's appointed guardian (if necessary) will all be involved.

5. Assessments

During the proceedings, social services will carry out assessments of the child’s needs, the parents' abilities to care for them, and any potential relatives who could look after the child. These assessments are key in helping the court decide the best outcome for the child.

6. Final Hearing

The Final Hearing takes place once all assessments and evidence are gathered. This is usually within 26 weeks (around six months) of the care proceedings starting, although in some cases it may take longer. The court will carefully consider all the information before making a decision about the child’s future.

What Decisions Can the Court Make?

At the end of care proceedings, the court will make a decision that it believes is in the best interest of the child. Some of the possible outcomes include:

• Care Order: The child is placed in the care of the local authority, which takes responsibility for the child's welfare. The child might be placed in foster care, with relatives or even home with this order.

• Supervision Order: The child stays with their family, but social services keep a close watch to ensure the child's well-being.

• No Order: The court decides that no further action is necessary, and the child remains at home without any intervention from social services.

The Role of Parents and Carers

Parents or guardians will be fully involved in the care proceedings. They have the right to attend all court hearings, present their side of the story, and be represented by a solicitor. Legal aid is available to help cover the costs of a solicitor, regardless of the parties financial situation if they have parental responsibility.

The Role of the Child’s Guardian

In care proceedings, the court will appoint a Children's Guardian to represent the child’s interests. The Guardian is independent of social services and provides a report to the court, setting out what they believe would be best for the child. The child will also have their own solicitor if they are old enough to understand the situation.

Can Care Orders Be Challenged?

If parents disagree with the outcome of the care proceedings, they may be able to appeal the court’s decision. This is usually only possible if there are strong grounds to believe that the decision was unfair or based on incorrect information.

Conclusion

Care proceedings can be a challenging and emotional process for families, but they are designed to protect children who are at risk. By understanding how care proceedings work, parents and carers can be better prepared and know their rights throughout the process. If you are involved in care proceedings or worried that social services may take action, it’s important to seek legal advice as early as possible to ensure the best possible outcome for your family.

For personal advice please call 01524 386500 or 01772 253841.

The Role and Responsibilities of an Executor or Administrator

After someone passes away, the individual appointed as the executor of their estate is granted various powers and responsibilities. This article will outline the tasks an executor is permitted to perform, as well as what they are prohibited from doing.

An executor is named in the deceased person’s Will. Their duties involve gathering information about the deceased's assets, reporting to the relevant authorities, and settling the deceased’s affairs. If no valid Will is present, an administrator may be appointed to carry out these tasks. This will typically be someone entitled to inherit under intestacy rules.

What Does the Role of Executor or Administrator Involve?

Acting as an executor or administrator can be demanding, especially if the estate is large, complex, or if there is the potential for family disputes. It can also be a lengthy process, particularly where the deceased held numerous assets or had outstanding liabilities.

The key responsibilities include:

• Valuing the estate

• Securing the estate’s assets

• Notifying creditors and asset holders of the death

• Calculating and paying Inheritance Tax

• Applying for a Grant of Probate (or, if there is no Will, a Grant of Letters of Administration)

• Collecting the assets and settling any debts after obtaining the grant

• Filing reports on the estate’s income and capital gains and paying the necessary taxes

• Distributing the estate to beneficiaries and obtaining receipts

Executors or administrators may choose to instruct a solicitor or legal professional to assist with estate administration. Doing so can help expedite the process and lower the risk of personal liability. If an executor administers the estate themselves and makes an error or neglects a duty, they could be held personally accountable for any resulting losses.

What Are Executors or Administrators Not Allowed to Do?

Executors and administrators have a legal obligation to safeguard the estate and act in the best interests of the beneficiaries at all times.

They cannot disregard the terms of the Will and must distribute the estate exactly as outlined. Any funds due to beneficiaries must be paid according to the Will’s instructions.

Assets must be sold at fair market value, and executors are generally prohibited from purchasing estate assets themselves, a practice known as "self-dealing."

Executors must handle the estate diligently, taking reasonable steps to prevent financial loss. This includes seeking professional advice when necessary, particularly to ensure that all available tax allowances and reliefs are claimed, helping to avoid an inflated tax bill.

Executors are not permitted to take money from the estate for personal use, including compensation for their time spent managing the estate. While some executors may be entitled to payment for their work, this is subject to limitations, and they should seek legal advice before withdrawing any payment.

Additionally, executors must not mix their own finances with the estate’s funds. For example, they should not close the deceased's bank accounts and transfer the balances into their personal account, even temporarily. Estate funds must remain separate at all times.

By adhering to these guidelines, executors can ensure they fulfil their role effectively and in line with legal requirements, safeguarding the estate for the beneficiaries.

Rachel Reeves’ Inheritance Tax Changes: A Wake-Up Call for Farmers

In a move that has sent shockwaves through the agricultural community, Labour’s Chancellor, Rachel Reeves, has unveiled a significant change to inheritance tax (IHT) rules that could affect thousands of farmers across the UK. Farmers, who had been assured that their ability to pass on agricultural land without facing hefty tax bills would remain intact, are now faced with a looming new tax regime that threatens to undermine this promise.

Starting in April 2026, agricultural property relief (APR) will be capped at £1 million, with assets exceeding this threshold subject to inheritance tax, albeit at a reduced 50% relief. For many farmers who own estates valued above £1 million, this change means they will face an effective inheritance tax rate of 20% on the value of their assets over the £1 million cap.

How Does Agricultural Property Relief (APR) Work?

Currently, agricultural property relief allows you to pass on agricultural land and certain related assets free from inheritance tax, either during your lifetime or through your will. This relief includes:

1. Land or pasture used for growing crops or rearing animals

2. Farm buildings, including farm cottages and farmhouses

3. The value of milk quotas linked to the land

4. Some agricultural shares and securities

However, not everything qualifies for APR. The following items are excluded from the relief:

1. Farm equipment and machinery

2. Derelict buildings

3. Harvested crops

4. Livestock

5. Property that is subject to a binding sale contract

From April 2026, the agricultural property relief will be capped at £1 million. This means that any agricultural property valued above this threshold will no longer be fully exempt from inheritance tax, with only 50% of the value above the £1 million cap qualifying for the relief.

The Chancellor claims this change will only impact a small minority of farms, with smaller family farms being largely unaffected. However, the National Farmers’ Union (NFU) has raised concerns, suggesting the Treasury’s estimates may be overly optimistic and that the new rules could affect as many as half of all working farms in the UK.

With these upcoming changes it’s now increasingly important that farmers take a proactive approach in reviewing their estates and consider their options well in advance of any succession planning.

New Partner Promotion at BSG Solicitors

BSG Solicitors has announced the promotion of Hannah Forsyth to Partner within the Family Law Department.

Hannah specialises in Children Law and is a member of the Law Society’s Children Panel. Her expertise includes advice on care proceedings, special guardianship and child arrangement orders.

She qualified as a Solicitor in 2019 and is experienced in dealing with highly complex matters and has run cases through the High Courts. Hannah is also a Legal Aid Supervisor, which involves all aspects of compliance and file management, supervision of staff, dealing with Legal Aid Agency audits and improving efficiency.

Hannah commented:

“I’m thrilled to be joining the Partnership at BSG Solicitors. The firm is committed to providing the best possible advice and support to clients and our family law team has a strength in depth covering all aspects of family law, both private matters and legal aid cases.”

Speaking of the promotion, Rebecca Lauder, Partner at BSG Solicitors, added:

“Hannah is a hugely talented Solicitor and her promotion is thoroughly deserved. She has made a valued contribution to the family law department and the firm’s continued success as a whole. I look forward to seeing her flourish in her new role as partner.”

Pictured L-R: Fiona Jolleys, Pippa Weld-Blundell, Rebecca Lauder, Hannah Forsyth, Emma Edwards.

BSG Tickled Pink

BSG Solicitors are once again delighted to support the #Wearitpink campaign raising funds for Breast Cancer now.

Breast Cancer Now’s wear it pink day is one of the biggest fundraising events in the UK. Taking place during Breast Cancer Awareness Month, thousands of amazing people wear it pink in their communities, schools or work places for the UK’s largest breast cancer charity.

Why might you want to purchase your freehold?

Most flat owners do not own the freehold of their homes. Instead, they are known as ‘long leaseholders’. They do not own their property outright, and ownership will revert to the landlord when their lease expires. This type of arrangement can have some pretty significant consequences, particularly in relation to your property’s value, what you are permitted to do with it, and your ongoing payment obligations. Therefore, some long leaseholders decide to exercise their legal right to join together with other long leaseholders in their building to purchase the freehold. You may see this referred to as collective, freehold, or leasehold enfranchisement, all of which mean the same thing.

Here, we discuss five key reasons why, as a long leaseholder, you might want to consider purchasing your freehold.

1.      To gain control of your building.

When you purchase your freehold, you take control of the management of your building and have a say in decisions relating to important matters such as maintenance and refurbishments.

2.      To bring an end to excessive service charges.

A common complaint among long leaseholders is the perception that their landlord is charging excessive service charges or providing substandard services for the sums demanded. By purchasing your freehold, you gain maximum control of the building and can ensure the service charge expenditure is fair and reasonable.

3.      To increase the value of your property.

The value of your property will likely drop as your lease term decreases. In addition, many mortgage lenders do not like short leases, so you may find it more difficult to obtain a mortgage. When you buy the freehold, you and the other freehold owners can extend the terms of your leases to 999 years, thereby increasing the value of your property.

4.      To increase your property’s saleability.

Purchasing a share of the freehold is generally attractive to buyers. This, coupled with the ability to extend your lease before selling, can significantly increase your chances of attracting buyers willing to pay a good price for your property.

While there are many clear benefits to purchasing your freehold, it’s important to consider the potential downsides before proceeding. The process itself can be complex, costly and time-consuming, sometimes taking many months to complete. Owning a share of the freehold is a significant responsibility, requiring an ongoing commitment both financially and in terms of your time. An experienced property solicitor will help you understand the pros and cons and decide whether it is the best option for you.

Transfer of Equity Process

‘TOE’ stands for ‘Transfer of Equity’. The TOE process is used to transfer the ownership of a property from one party to another, such as when a property owner gets married and wishes to add their new spouse to their property’s title documents.

A general overview of the TOE process is as follows:

1.      Agree on the TOE terms.

Before proceeding with a TOE, it’s crucial to ensure that all parties have a clear understanding of the terms. For example, if you are divorcing your partner and wish to remain in the family home, you may need to agree on a price for buying them out. We would recommend matrimonial advice from a Family Solicitor if the transfer is due to a divorce.

2.      Secure the existing mortgage lender’s consent or obtain a new mortgage.

If there is an existing mortgage on the property, you must seek the lender’s consent to the proposed TOE. If the lender does not believe the new owner can afford the mortgage repayments, they are unlikely to agree to the TOE. If the new owner cannot secure an alternative mortgage, the transfer cannot proceed.

3.      Carry out all necessary searches and checks.

You must review the title deeds to check that there are no restrictions that may affect the proposed TOE. Your solicitor or conveyancer will do this for you.

4.      Draft the legal documentation.

The key document in a TOE is the transfer deed. Your solicitor or conveyancer will prepare the document, outlining the TOE and stating who will own the property going forward.

5.      Sign the legal documentation.

Once your conveyancer or solicitor has prepared the transfer deed and any other legal documentation, they will send it to you and the other parties to sign.

6.      Complete the TOE.

Your solicitor will complete the TOE by dating the signed documentation and arranging for the payment of any money.

7.      Pay any necessary Stamp Duty Land Tax (SDLT)

Whether or not SDLT will be payable on the TOE depends on the circumstances. If the transfer is a gift, no SDLT will be due. However, SDLT can be payable even if no money changes hands. For example, if your new spouse transfers half of their property to you and you take on half of the mortgage, you will need to pay SDLT if your part of the mortgage exceeds the SDLT threshold, currently £250,000. There may also be other tax implications when disposing of property, even for no consideration, and it’s wise to obtain advice from a tax expert before proceeding.

8.      Update the property register

After the TOE is complete, you’ll need to apply to the Land Registry to update the property register to reflect the change in ownership. Once they have made the necessary amendments, the land registry will send you a copy of the updated register.

BSG Welcomes Experienced Family Solicitor

BSG Solicitors are delighted to have Alison Moore join our family law department in Lancaster.

Alison brings with her a wealth of experience, having qualified in 1992 she has worked exclusively in family law since then and has extensive experience in dealing with divorce, dissolution of civil partnerships and the resolution of complex financial disputes.

She also regularly advises on pre-nuptial agreements, cohabitation and separation agreements.

Alison is a Resolution accredited family specialist and an experienced collaborative lawyer, which means she can offer an alternative route to help separating couples reach decisions amicably.

Alison commented:

“I’m pleased to have joined such a well-respected family law team. Having spent much of my career based in Kendal, I’m looking forward to working with clients across South Cumbria as well as Lancashire.”

Amy Does It Again

Amy Nash has been shortlisted for National Paralegal of the Year - Midlands/North at the National Paralegal Awards for the second year running!

‘Paralegal of the Year’ is awarded to individuals who can clearly demonstrate how well they have performed to exceed clients’ expectations and how they have made a significant contribution to their practice.

Amy commented:

“I can’t believe I’ve been shortlisted for a second time. It was a fantastic experience last year and great to meet so many of my peers from law firms all over the country.”

Rebecca Lauder, Partner and Head of Private Client at BSG Solicitors added:

“This is so well deserved once again. Amy is an asset to the firm and has demonstrated her commitment to the firm and her career through her continued studies and progression each year.”

The National Paralegal Awards winners will be announced on 5th September 2024 at the Burlington Hotel in Birmingham.