What does the Leasehold and Freehold Bill include?
The Leasehold and Freehold Bill would see the standard lease term for both houses and flats being extended from 90 years to 990 years and ground rents reduced to zero to gradually phase out leaseholds. In addition, there will be a ban on new leasehold houses, with all new houses having freehold status from the start, and the existing 25% non-residential limit, which prevents leaseholders from acquiring their freehold or managing the building in buildings with a mix of residential and commercial units will be expanded to include buildings with up to 50% non-residential units, allowing leaseholders to purchase the freehold or take control of building management.
Other proposals include:
- Better transparency over leaseholders’ service charges in a standardised, comparable format.
- Making it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold.
- Transparent administration fees in place of buildings insurance commissions for managing agents, landlords and freeholders.
- Extending access to redress schemes for freeholders to belong to so leaseholders can challenge poor practice.
- Removing the presumption that leaseholders will have to pay their freeholders’ legal costs when challenging poor practice.
- Removing the requirement for new leaseholders to have owned their house or flat for two years before they can benefit from these changes.
Why have these reforms been suggested?
The proposals are intended to improve home ownership for leaseholders and give them more rights by making it easier for them to extend their lease or buy their freehold and fight excessive service charges.
King Charles III said in his speech: “My ministers will bring forward a bill to reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of homeowners through punitive service charges.
“Renters will benefit from stronger security of tenure and better value, while landlords will benefit from reforms to provide certainty that they can regain their properties when needed.”
When will these changes come into effect?
Given that the Leasehold and Freehold Reform Bill was only introduced to Parliament last month there is still a long way to go before it becomes law, and it could be subject to several changes and amendments before then.
Although the bill could receive Royal Assent by mid-2024, there is the possibility that a general election could happen next year, therefore it is unlikely that any changes will take place before then. However, regardless of the results of a general election, both major political parties have pledged their commitment to property and housing reform.
