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Legal changes

The King’s Speech of 7 November 2023

A summary of the announced changes to The Leasehold and Freehold Bill and The Renters (Reform) Bill.

King Charles delivered his first legislative agenda on 7 November 2023, marking the final session before the next general election. Amongst the wide range of areas covered were renters’ rights. Two bills were mentioned.

The Leasehold and Freehold Bill

The King announced that the government will bring forward a bill to reform the housing market, with aims to make it easier and cheaper for leaseholders to extend their leases or purchase their freeholds. Objectives include increasing the standard lease extension term from 90 years to 990 years, removing the requirement for two years’ ownership before a lease can be extended, increasing the 25% ‘non-residential’ limit to 50% to expand the number of tenants who can acquire the freeholds of mixed-use buildings, and reducing ground rent to £0.

Additionally, the exploitation of homeowners through punitive service charges will be addressed through increasing transparency of expenses to facilitate informed challenges to costs. Alongside this, there is an intention to replace buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees. The aim is to reduce charges on top of premiums paid by leaseholders.

The bill also proposes banning the sale of houses by way of leasehold interest save in exceptional circumstances yet to be clarified. This is likely to have limited effect, as most houses are already sold as freehold interest. It suggests that a ban on leasehold flats, which was being considered in favour of a commonhold model, will not be included in the Leasehold and Freehold Bill.

The Renters (Reform) Bill

Renters will benefit from stronger security of tenure through outlawing no-fault evictions. To mitigate the impact on landlords, they will be given greater certainty regarding their ability to evict anti-social tenants and a right to regain their properties when they want to sell or move back in. An additional ground for possession will be provided in relation to student lets to address the expectation of short term leases.

Other aims include creating a digital Private Rented Property Portal to bring together key information and ensure landlords understand their obligations and can demonstrate compliance.

It appears from the speech that the government is committed to passing the Renters (Reform) Bill before the next general election. However, some have argued that there is insufficient time to reach this target, given the government’s remarks during the recent parliamentary debate held on 23 October 2023. It was confirmed that the aims of the Bill, specifically the aim to abolish no-fault evictions under section 21 of the Housing Act 1988, will only be initiated once successful reform of the court system is accomplished to ensure landlords have sufficient protection to regain their properties.

Some have criticised this delay, stating that the nature of many of the changes within the Bill will, in practice, be enacted by future regulations. Therefore, they argue that the Renters (Reform) Bill could be enacted before court reforms are complete, with sufficient time to implement them before the new regime comes into force.

Additionally, criticism following the speech focuses on the absence of proposals to tackle fundamental residential issues, such as lack of supply and affordability in the current housing crisis. Critics have voiced concern about a failed response to those wanting greater protection for leaseholders and those seeking to protect and realise real estate investments.

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