Leasehold and Freehold Reform Bill starts progress through Parliament
A ban on new leasehold houses and limits on ground rent for new flats are contained in the long-promised and eagerly awaited Bill, which should be law by the time of the next General Election, according to Secretary of State for Levelling Up, Housing and Communities Micheal Gove, MP.
Gove has been clear that the leasehold system is unfair and outdated, and liberating leaseholders forms a vital part of the UK Government’s long-term plan for housing. He said the Bill, which has cross-party support, will deliver significant new rights and protections, slash unfair costs and crack down on exploitation.
The sale of new leasehold houses will be banned in all but exceptional circumstances, so every new home in England and Wales will be freehold from the outset.
For existing leaseholders, selling should be made quicker and easier by the setting of a maximum time and fee for freeholders to provide all the information required.
Key features of the Bill
- An increase in the standard lease extension from 90 years (or 50 years in flats) to 990 years
- Greater transparency over service charges by making freeholders or managing agents issue bills in a standardised format that is clearer and easier to challenged
- Making it easier and cheaper for leaseholders to take over the management of their property
- Scrapping the presumption that leaseholders pay their freeholders’ legal costs when challenging poor practice
- Banning opaque and excessive buildings insurance commissions for freeholders and managing agents
- Removing the requirement for a new leaseholder to have owned their house or flat for two years before they can extend their lease or buy their freehold.
Timothy Douglas, Head of Policy and Campaigns at Propertymark comments:
“Further reforms to the leasehold system in England and Wales have been long anticipated and the Bill will bring much needed protections for leaseholders. Propertymark will support the UK Government to ensure the specific details work in practice, whilst ensuring property agents understand the changes. It is also important implementation is well planned and managed as these reforms are significant and must ensure no leaseholder is left behind.”
Propertymark will be responding to the UK Government’s consultation which aims to determine the best way of reforming rules on ground rent for existing leaseholds, the outcome of which will feed into the Leasehold and Freehold Bill.
Propertymark believes the only option to properly level the playing field would be to set all rents at one peppercorn – as has already been done for new leaseholds by the Ground Rent Act 2022.
Propertymark will continue to work with the UK Government to ensure any new legislation is evidence-based and fit for purpose.
Reform of the leasehold system is long overdue, and it’s vital that the opportunity to ensure the market works for both agents and homeowners isn’t missed.
Given the significance of this consultation Propertymark has organised a round table event on Wednesday 6 December between 11:00 and 12:00. Officials from DLUHC will attend and members can reserve a place by contacting our Policy and Campaigns team on policy@propertymark.co.uk.
