King’s Speech: leasehold system and private rental reform
Among the 21 bills forming King Charles’s first King’s Speech to Parliament as monarch, were proposed government reforms of the leasehold system and private rental sector.
Addressing both Houses of Parliament, King Charles said: “My ministers will bring forward a Bill to reform the housing market, by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of homeowners through punitive service charges.
“Renters will benefit from stronger security of tenure and better value, while landlords will benefit from reforms, to provide certainty that they can regain their properties when needed.”
Both The Leasehold and Freehold Reform Bill and The Renters (Reform) Bill which contain these measures, had already been published as part of previous parliamentary sessions and still await yet further debate as they continue to make their way through Parliament.
However, amongst opposition parties and some parliamentary commentators, is the view that this news is a ‘watering down’ of original plans – with the government only last month conceding that the long-awaited ban on ‘no fault’ evictions will be indefinitely delayed until “vital” updates to the court system are undertaken.
This abolition of Section 21 notices, which would provide protections to tenants, forms a key part of The Renters (Reform) Bill, which was only first published in May.
What is the proposed leasehold reform?
Changes to the leasehold system were announced back in 2021 and championed as the biggest change to property law for 40 years. Although the key principle remains to phase out leasehold, this will only apply to newly built houses rather than flats, which form the majority of leasehold properties in England and Wales.
However, the Bill has retained for both current flat and house leaseholders measures aiming to help them extend their lease, purchase their freehold and move towards managing their building. This would include an increase in the standard lease extension term from 90 years to 990 years.
A proposed cap to existing ground rents is likely to be hotly debated as the Bill goes through Parliament, and as the details of the proposals are analysed it will become clearer on how the legislation will practically look for new and current leaseholders when it becomes law.
Commenting on the news, Ashley Roe, who regularly supports leaseholders in his role within Fosters Solicitors’ Residential Property team, said: “Elements of The Leasehold and Freehold Reform Bill should be seen as beneficial to leaseholders, as the new Act should abolish the timeframe for a new leaseholder to be able to extend their lease. You would no longer have to wait for two years before you could extend your lease through the Leasehold Reform, Housing and Urban Development Act 1993.
“The standard term for a lease extension being extended from 90 years to 990 years would also ultimately allow leaseholders to secure the long-term value of their property and reduce the costs in doing so.
“The King’s Speech also mentioned setting a maximum time and fee for the provision of information required to sell a leasehold property, which can only be beneficial for leaseholders looking to sell their property – making the process more transparent and easier to navigate.”
He added: “Also within the Bill, they are looking to help leaseholders in relation to replacing buildings insurance commissions for managing agents, landlords and freeholders, with transparent administration fees to stop leaseholders being charged exorbitant, opaque commissions, on top of their premiums.
“It would also extend access to redress schemes for leaseholders to challenge poor practice and will require more freeholders to belong to the schemes so leaseholders can challenge them if needed. Ultimately we await more information and details, as the Bill is still yet to be approved by the parliamentary process, but if these measures are set in law it would certainly result in some significant changes to this property sector for some time.”
At Fosters Solicitors, we have property experts who can provide specialist support and advice to leaseholders, including navigating the current process of lease extensions.
Our team are also expert in supporting both landlords and tenants about their rights and any disputes that might occur.
For more information, please contact us on 01603 620508 or complete the contact form below.
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This article was produced on the 8th November 2023 by our Residential Property team for information purposes only and should not be construed or relied upon as specific legal advice.