A couple of case reports are on the go, but maybe significantly delayed, I’m working up to moving house next week, and physically and mentally, everything is all over the place and probably in the wrong box.
But we have to note the King’s Speech and the apparent government legislative agenda for housing and leasehold. It is, sadly (though not entirely sadly) notable for what is not in it.
The speech confirmed the carrying over of the Renters (Reform) Bill – soon heading into committee stage. But as we now know from the DLUHC response to the select committee report on the bill proposals, the reform to end section 21 won’t (under this govt) be brought into force unless and until various ‘reforms’ to the court process are in place, so who knows when, if ever (under this Govt). Meanwhile, there are some horrors like the proposed new ground 8A in the Bill to be addressed, let alone rumoured changes for private sector student accommodation, and the evidential thresholds for the selling/family to live there grounds of possession.
On leasehold, what was offered was more or less what was rumoured and commented on by J here. According to the briefing note, the ‘Leasehold and Freehold Reform Bill’ will:
o Making it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold – so that leaseholders pay less to gain security over the future of their home.
o Increasing the standard lease extension term from 90 years to 990 years for both houses and flats, with ground rent reduced to £0. This will ensure that leaseholders can enjoy secure, ground rent free ownership of their properties for years to come, without the hassle and expense of future lease extensions.
o Removing the requirement for a new leaseholder to have owned their house or flat for two years before they can benefit from these changes – so that more leaseholders can exercise their right to the security of freehold ownership or a 990-year lease extension as soon as possible.
o Increasing the 25 per cent ‘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 per cent non- residential floorspace to buy their freehold or take over its management.
Improving leaseholders’ consumer rights:
o Making buying or selling a leasehold property quicker and easier by setting a maximum time and fee for the provision of information required to make a sale (such as building insurance or financial records) to a leaseholder by their freeholder (known as ‘landlords’).
o Requiring transparency over leaseholders’ service charges – so all leaseholders receive better transparency over the costs they are being charged by their freeholder or managing agent in a standardised comparable format and can scrutinise and better challenge them if they are unreasonable.
o Replacing buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees – to stop leaseholders being charged exorbitant, opaque commissions on top of their premiums.
o Extending access to “redress” schemes for leaseholders to challenge poor practice. We will require more freeholders to belong to a redress scheme so leaseholders can challenge them if needed.
o Scrapping the presumption for leaseholders to pay their freeholders’ legal costs when challenging poor practice.
o 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, access to support via redress schemes, and to challenge the charges they pay by taking a case to a Tribunal, just like existing leaseholders.
o Building 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.
Reforming the leasehold market:
o Banning the creation of new leasehold houses so that – other than in exceptional circumstances – every new house in England and Wales will be freehold from the outset.
We will also consult on capping existing ground rents, to ensure that all leaseholders are protected from making payments that require no service or benefit in return, have no requirement to be reasonable, and can cause issues when people want to sell their properties. Subject to that consultation, we will look to introduce a cap through this Bill.
Now there is little here that is actively bad, as J noted, but the timidity is notable. While it appears to be implementing some parts of the Law Commission recommendations (scrapping marriage value, qualification threshold for enfranchisement, extended 990 year term on extension and so on), there is notably little (well nothing) on actively pushing towards commonhold for new developments and blocks. New leases for flats (though not for houses) remain the default tenure without restriction.
There are also some oddities – what, for instance is the ‘presumption for freeholders to pay their freeholder’s legal costs’ in a Tribunal case? There is no presumption – it all depends on what clauses there are in the lease that might allow it. I suppose this might mean either a rebuttable presumption that a section 20C order will be made in Tribunal proceedings, or more challengingly, a complete ban.
I’m also a bit confused about extending access to redress schemes by requiring ‘more freeholders’ to belong to them – there aren’t any redress schemes at all involving freeholders that I’m aware of.
A standard form for service charge demands is a good idea, one that has been pushed by RICS and others for quite a while. I’m not sure how effective it would be in improving transparency from the worst offenders, but it certainly can’t hurt (and also make Tribunal proceedings more straightforward).
The consultation on capping existing ground rents? As any fan of Yes Minister knows, for that which you wish not to implement but need to sound concerned about, you announce a consultation into.
Also, while the Building Safety Act certainly has a lot of flaws, heaven knows, I don’t know what ‘ensuring it operates as intended’ means. Not least because it was often not clear what was intended. So we will have to wait and see.
But overall, there is the sense that a planned larger and more transformative project has been chopped and stunted. Whether from lack of parliamentary time, or political pressure from major donors and party placemen, is anyone’s guess…
Then lastly the announcement that wasn’t. Suella Braverman’s proposed tent snatching law. Thankfully, the Home Secretary (I still can’t entirely believe that is true) over-reached herself in her bid for the post election leadership and her plans to legally snatch tents on city streets and fine charities that provide tents to the street homeless didn’t make it into the King’s Speech. The sound of people silently distancing themselves from her was deafening.
Update 9 Nov 2023 – a 6 week DLUHC consultation on restricting existing ground rents is now live – setting out 5 options
- capping ground rents at a peppercorn
- setting maximum financial value for ground rent
- capping ground rents at a percentage of the property value,
- limiting ground rent to the original value when the lease was agreed
- freezing ground rent at current levels.
So I may have been a touch too cynical…