The Leasehold and Freehold Reform Bill has been published
28 November 2023
The Leasehold and Freehold Reform Bill has been published, somewhat sooner than expected following the King’s Speech.
On first cursory viewing it appears to reflect the main headlines of the King’s Speech but now we have some substance.
The Bill is the second part of the Government plans to reform English and Welsh property law. It follows on from the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for new, qualifying long residential leasehold properties in England and Wales. The Government says the Bill will make long-term changes to homeownership for millions of leaseholders in England and Wales.
The explanatory notes state that the main elements of the Bill are that it will empower leaseholders by making it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold.
The main headlines from the draft bill include the following.
- It will increase the standard lease extension term for houses and flats to 990-years (up from 90 years in flats, and 50 years in houses), with ground rent reduced to a peppercorn (zero financial value) upon payment of a premium.
- Removal of the requirement for a new leaseholder to have owned their house for two years before they can extend their lease or buy their freehold and for flats before they can extend their lease.
- Removal of ‘marriage value’ from the calculation of the cost which currently makes it more expensive to extend leases when they’re close to expiry.
- Increase the 25% ‘non-residential’ limit preventing leaseholders in buildings with a mixture of homes and other uses such as shops and offices, from buying their freehold or taking over management of their buildings – to allow leaseholders in buildings with up to 50% non-residential floorspace to buy their freehold or take over its management.
- Ban the sale of new leasehold houses so that, other than in exceptional circumstances, every new house in England and Wales will be freehold from the outset.
- The Bill also states that it will improve leaseholder consumer rights by requiring greater transparency regarding leaseholders’ service charges, replacing buildings insurance commissions for managing agents, scrapping the presumption for leaseholders to pay their landlords’ legal costs when challenging poor practice, granting freehold homeowners on private and mixed tenure estates the same rights of redress as leaseholders by extending equivalent rights to transparency over their estate charges and to challenge the charges they pay by taking a case to a Tribunal.
- It will build on the legislation brought forward by the Building Safety Act 2022, ensuring freeholders and developers are unable to escape their liabilities to fund building remediation work – protecting leaseholders by extending the measures in the Building Safety Act 2022 to ensure it operates as intended.
The Bill will make changes to the Leasehold Reform Act 1967 and Leasehold Reform Housing and Urban Development Act 1993 with a ‘new method for calculating price payable’.
We will be keeping track of the Bill’s progress, amendments and updates to it and will release more detailed analysis once we have analysed the 140 pages of the Bill and the 69 pages of explanatory notes.
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Gavin Walmsley
Services
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 November 2023.