Leasehold Reforms - The Latest from the King's Speech

Published: November 22nd, 2023

7 min read

We have seen the Leasehold Reform (Ground Rents) Act 2022 come into force, restricting ground rents in new long leases (unless excepted) to a peppercorn rent. But what of the other leasehold reforms we have been hearing of that seem to be making slow progress?

Within the King's Speech on 7 November 2023, King Charles III addressed the proposed reforms, saying:

"My Ministers will bring forward a bill to reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold…."

The accompanying Briefing Note provides the headlines on how the proposed Leasehold and Freehold Reform Bill intends to deliver the Government's manifesto commitments on leasehold reform. It aims to bring fairness in the housing market "by making it cheaper and easier for more leaseholders to extend their lease, buy their freehold, and take over management of their building".

The proposals include:

  • Making it cheaper and easier for leaseholders of flats and houses to extend their lease or buy their freehold;
  • Increasing the standard lease extension term to 990 years for both houses and flats, with zero ground rent;
  • Removing the two year ownership requirement to qualify for a lease extension or to acquire the freehold;
  • Increasing the "non-residential" limit to 50% in mixed use buildings for buying the freehold or taking over its management;
  • Making leasehold re-sales quicker and easier by setting a maximum time and fee for freeholders to provide information;
  • Requiring transparency over service charges in a standardised comparable format allowing for better scrutiny on reasonableness;
  • Extending access to "redress" schemes for leaseholders to challenge poor practice by requiring more freeholders to belong to a redress scheme, scrapping the presumption that leaseholders pay the freeholders' legal costs when challenging poor practice; and granting the same rights of redress for freeholders to challenge estate charges at a Tribunal;
  • Extending the measures in the Building Safety Act 2002 to ensure freeholders and developers cannot escape their liabilities to fund building remediation work;
  • Banning the creation of new leasehold houses;
  • Consulting on capping existing ground rents at a peppercorn.

We suspect consultation on capping existing ground rents will highly debated and contentious. Depending on the outcome of such consultation however, it could form part of the Bill.

It remains to be seen whether there is time for these proposals to translate into the statute books under this current Government. We also note what has not been said in the Briefing Note. Law Commission recommendations also included the scrapping of marriage value and banning leasehold ownership not only on new houses but also flats, but there is no suggestion that commonhold is going to be pushed for new blocks meaning leasehold will remain the default tenure for flats.

There is a lot of finer detail which remains to be seen and we will continue to track progress of the proposed reforms with interest.

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