The King’s Speech
Yesterday, King Charles outlined the government's priorities for the year ahead, in his first King's Speech as monarch.
The speech outlined 21 Bills that ministers intend to pass in the next session of Parliament, likely to be the last before the next general election. This speech is the first King's Speech in 70 years, following the death of Queen Elizabeth II last year, and has been highly anticipated for plans relating to criminal justice and rent reform to assorted economic and health protections. As readers will no doubt be aware, there has been a high degree of interest in the content regarding leasehold reforms.
Whilst the speech itself provided only a modest level of detail, it is the published notes from the Prime Minister’s Office that provide further detail on the intended course of change.
Perhaps of most interest to our readers, the Leasehold and Freehold Reform Bill is intended to deliver the Government’s manifesto commitments on leasehold reform by “making it cheaper and easier for more leaseholders to extend their lease, buy their freehold, and take over management of their building”
The notes published today provide further definition of these intentions and reiterate many well publicised points, specifically:
- 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.
- 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.
- 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.
- 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.
Further bulleted detail is given on leaseholder consumer rights, including:
- 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’).
- 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.
- 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.
- Extending access to “redress” schemes for leaseholders to challenge poor practice. This requires more freeholders to belong to a redress scheme so leaseholders can challenge them if needed.
- Scrapping the presumption for leaseholders to pay their freeholders’ 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, access to support via redress schemes, and to challenge the charges they pay by taking a case to a Tribunal, just like existing leaseholders.
- 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.
It should be remembered that although the speech sets out a trajectory and range of plans for “long term changes for our country” there is still a considerable journey for these Bills to become law. If nothing else, it has provided an indication of intention more than action. We shall continue to monitor and report on the evolution and progress of reforms in the months ahead.