There was some important legislation for the housing market in the King’s Speech today, as King Charles opened Parliament for the first time as monarch.
Today (7th November) marked the start of the parliamentary year, and the first King’s Speech since 1950. In it, the King read out a speech written by the government setting out its priorities for the coming months, and it included 21 laws that are intended to be passed in the next Parliamentary session.
We heard that the UK government is committed to making some important changes to the UK housing market, with the King’s Speech announcing the intention to bring into law two much-debated pieces of legislation: the Renters Reform Bill and the Leasehold and Freehold Bill.
1. The King’s Speech tackles leasehold
The King’s Speech stated: “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.”
The leasehold/freehold debate has become a highly emotive and topical issue in recent years, after the widely reported ‘leasehold scandal‘ that saw huge numbers of homeowners trapped with escalating ground rents and service charges after buying new-build houses on a leasehold basis.
The Leasehold and Freehold Bill is aimed at improving the rights of leaseholders, including making it cheaper to extend leases and buy freeholds, increasing the standard lease extension term to 990 years, and requiring full transparency over service charges. It also proposes banning the creation of new leasehold houses.
In England, almost half of all flats are sold on a leasehold basis, and this is not expected to drastically change – but the leasehold owner’s rights should improve as a result of the Bill.
Sensible provision for unique cases
Timothy Douglas, head of policy and campaigns at Propertymark, said: “Many agents and leaseholders will be relieved to hear plans for new legislation to further reform the leasehold system. However, the UK Government must ensure any legislation to abolish leaseholds is fit for purpose.
“For example, there are no reports yet that have confirmed what impact capping ground rents will have on service charges, and it is important to consider that every development is individual, and some may still require aspects that justify specific service charges.
“As every development will likely have unique characteristics by design, there may well be a need for sensible provision and certain clauses/exemptions where an ongoing management fee might be appropriate.
“There may well be communal aspects of a development design where a management charge might still be relevant for the upkeep of an area for example.”
2. More security for all with the Renters Reform Bill
The King’s speech said: “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.”
As was widely anticipated, the King’s Speech announced the Renters Reform Bill will be carried over to the next Parliament, having received its second reading around two weeks ago. Among its key points, it includes proposals to abolish no-fault (Section 21) evictions to bring more security to tenants.
This controversial move, though, will now be put on hold until “stronger possession grounds a new court process is in place”, to protect landlords from lengthy delays to legitimately evict tenants, such as when there are serious rent arrears or antisocial behaviour.
As well as bringing in stronger grounds for possession, such as if a landlord wants to repossess the property for themselves or a family member, the Bill also sets out to end blanket bans on pets, as well as on those in receipt of benefits or with children.
Propertymark’s Timothy Douglas said: “It is welcome that the UK government has recognised the importance of reforming the court system and protecting the rights of landlords to get their property back when things go wrong before significant changes to private renting in England are introduced.
“We look forward to working with the UK government to ensure both pieces of legislation are evidence based and fit for purpose.”