The government has announced a new bill which will reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and fight excessive service charges.
The leasehold and freehold reform bill delivers the government’s manifesto commitments on leasehold reform and will “make the long-term and necessary changes to improve home
ownership for millions of leaseholders”.
This will be achieved by making it cheaper and easier for more leaseholders to extend their lease, buy their freehold, and take over management of their building.
The bill will hope to empower leaseholders, improve leaseholders’ consumer rights, and reform the leasehold market.
These reforms build on the Leasehold Reform (Ground Rents) Act 2022, which put an end to ground rents for new, qualifying long residential leasehold properties in England and Wales.
The King’s Speech also said that this would tackle the “exploitation of millions of homeowners through punitive service charges”.
Reaction
This announcement was met with positivity by BBD Pitmans partner, John Stephenson, who said: “The government has been working to reform the ‘toxic’ leasehold system for some years now and the proposed legislation will be welcome to both buyers and sellers.
“This news will be especially welcomed by those who own properties whose leases are or will soon fall below 80 years – as their properties will become easier to sell and mortgage given the proposal to change the standard lease extension entitlement from 90 to 990 years.”
However, a note of caution was raised by Irwin Mitchell head of residential property, Jeremy Raj, who said it’s “difficult” to see anything being achieved following this announcement, other than irritating certain MPs with “unrealistic expectations”.
He also stated that the announcement “disappoints” those who have been hoping for many years now for a coordinated and fundamental overhaul of the areas that have let leasehold down as a system of tenure.
Renters (reform) bill
Also included in the speech was the renters (reform) bill which, the King stated, will allow landlords the ability to “regain their properties when needed”.
Landlords were not the only ones mentioned by the King as he added that the bill would benefit renters as it will provide “stronger security of tenure and better value”.
The renters (reform) bill was first introduced to Parliament earlier this year in May after previously being mentioned in the 2019 Conservative manifesto.
However, the bill is not expected to receive its second reading in Parliament until October 23, 2023.
BDB Pitmans partner, Tristan Ward, said “tenants in the private sector will be pleased the bill has not been dropped altogether despite the delays in implementation of no-fault eviction".
He added: “We think the bill will be passed with few amendments; and it remains to be seen whether and how many private sector landlords will exit the market, with consequent effects on availability of stock and levels of rent in a country chronically short of housing.”
tom.dunstan@ft.com
