The King’s Speech and leasehold reform
30 October 2023
The King’s Speech is scheduled for Tuesday 7 November and will set out the Government’s plans for the coming year. Ministers have long promised to change the controversial leasehold system, which has seen expensive fees imposed on homeowners. We have now heard confirmation in the press that leasehold reform will be included.
On 21 December 2017 the Government announced plans to tackle the growing problem of newly built houses sold as leasehold rather than freehold and to limit ground rents on new lease agreements. Leasehold reform was included in the Law Commission’s 13th Programme of Law Reform with the aim of finding ways to make buying a freehold or extending a lease “easier, faster, fairer and cheaper.”
We have seen the introduction of The Leasehold Reform (Ground Rent) Act 2022 which came into force on 30 June 2022 and on 20 February 2023 Michael Gove, Secretary of State at the Department for Levelling Up, Housing and Communities said:
“We hope, in the forthcoming King’s Speech, to introduce legislation to fundamentally reform the system. Leaseholders, not just in this case but in so many other cases, are held to ransom by freeholders. We need to end this feudal form of tenure and ensure individuals have the right to enjoy their own property fully”.
The Housing Minister Rachel Maclean has also now confirmed a Bill to phase out some leaseholds in England and Wales will be included in the King’s Speech. So, it will be very interesting to see what is included.
The Bill is expected to ban leaseholds for new houses, but not new flats. There were no further details, but it is understood that following a consultation the Government would cap all existing ground rents at a very low rate, known as a “peppercorn” rate. Ground rents for properties sold after June 2022 were already capped by the Leasehold Reform (Ground Rent) Act 2022.
The Government may also change the standard contract lease extension from 90 years to 990 years.
We look forward with bated breath to see the contents of the speech and as members of ALEP we will be attending the King’s Speech Online Panel Session to consider any impact on professional practices and how members should advise their clients.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2023.