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If you have any queries regarding the bills discussed in this article or their relevance to you or your business, please contact our Property Litigation department.
We have previously discussed the King’s Speech with regard to its proposal to introduce an independent football regulator. Under the tagline 'strengthening society’, the King's Speech 2023 also outlined two landmark bills introducing fundamental changes to the real estate landscape in England and Wales.
Our Property Litigation team will explore the effects of these two bills: the Leasehold and Freehold Bill and the Renters (Reform) Bill.
Leasehold and Freehold Bill
This bill is intended 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’. In practice, the bill is set to bring about the following changes:
Empower leaseholders:
- Make it more affordable and less complicated for current leaseholders in residential properties to extend their lease or buy their freehold.
- Change the standard lease extension period from 90 years to 990 years for houses and flats whilst limiting ground rent to £0.
- Abolish the requirement for a new leaseholder to have owned their residential property for at least two years before they can benefit from these amendments.
- Amend the 25% ‘non-residential’ limit, which prohibits leaseholders in mixed-use buildings comprising of homes and other uses from purchasing their freehold or taking over management of their buildings, by enabling leaseholders in buildings with up to 50% non-residential floorspace to do so.
Improve leaseholders’ consumer rights:
- Accelerate and simplify the process of buying or selling a leasehold property by introducing a time and fee limit on the supply of information needed to carry out a sale to a leaseholder by their freeholder.
- Demand transparency regarding the service charges paid by leaseholders to the effect that leaseholders are able to compare, scrutinise and challenge (if necessary) such costs.
- Remove building insurance commissions for managing agents, landlords, and freeholders and replace these with transparent administration fees.
- Increase access to “redress” schemes so a greater number of leaseholders are able to challenge poor practice.
- Abolish the presumption that leaseholders pay their freeholders’ legal fees when challenging the latter’s poor practice.
- Provide freehold homeowners on private and mixed tenure estates with identical redress rights to those of leaseholders.
Reform the leasehold market
- Prohibit the creation of new leasehold houses, thereby ensuring that every new home in England and Wales will be freehold from the beginning (unless exceptional circumstances apply).
Renter's (Reform) Bill
This second bill has been outlined to ensure that ‘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’. Such reforms are set to take place through various measures, including:
- The removal of “no-fault evictions” (section 21 notices), but only once ‘stronger possession grounds and a new court process is in place.’
- Reinforcing the grounds for possession that are available to landlords. This includes the introduction of new mandatory possession grounds, such as if a landlord would like to sell their property or if there are repeated significant rent arrears.
- Bringing in greater powers to evict anti-social tenants. For example, there is set to be a widening of the criteria for disruptive and harmful activities that can result in eviction.
- Abolishing landlords’ blanket bans on pets, such as granting tenants the ability to request a pet and ensuring that landlords cannot unreasonably refuse such requests.
- Establish a digital ‘Private Rented Property Portal’ to encompass fundamental information for landlords, tenants, and councils alike.
- Facilitate a swifter and cheaper conclusion to disputes via a new ‘Private Rented Sector Ombudsman’ that will offer ‘fair, impartial and binding resolution’ and lessen the necessity of court proceedings.