Property ownership: Major shake-up proposals set to become law

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Following the announcement of the general election to take place on 4 July 2024, a number of Bills (draft legislation) were pushed through parliament, whilst several others did not make the cut. At the time of the announcement, two key Bills were being deliberated in the House of Lords but had not yet become law: the Renters Reform Bill, and the Freehold and Leasehold Reform Bill.

What is the Renters Reform Bill?

The Renters Reform Bill, which included the abolition of ‘no fault evictions’, did not receive Royal Assent before parliament was dissolved, and therefore did not make the cut. The proposals for reforming the rental market, and further empowering tenants of rented properties, are back to the drawing board – however, the Bill was generally supported by both Labour and the Conservatives, which gives a strong indication that reform of some nature will be back on the table no matter which party forms the next government.

What is the Freehold and Leasehold Reform Bill?

The Freehold and Leasehold Reform Bill, on the other hand, gained the support it required from all parties and therefore became the Freehold and Leasehold Reform Act on 24 May 2024. The Act contains several key provisions which will substantially overhaul the existing ownership regime – for leasehold properties in particular.

These include provisions for making the lease extension process more affordable, and straightforward, for leaseholders, and making it easier for leaseholders to enfranchise (collectively buy the freehold interest in their building, allowing a greater degree of control over management issues and service charges). The Act will allow leaseholders of both houses and flats to extend their leases by 990 years (it was, previously, 90 years for flats, and 50 years for houses). Additionally, leaseholders will not need to have owned their properties for two years before making a lease extension claim, which was a previous requirement – meaning that leaseholders can apply for an extended lease as soon as they purchase a property.

Controversially, one of the key proposals in the Freehold and Leasehold Reform Bill – to abolish annual ground rents, or to cap them at a maximum of £250 per year – was not included in the version of the Bill that received Royal Assent. Leaseholders will therefore remain liable for paying ground rent to their landlord in accordance with their leases, which in some cases can be several hundred pounds a year.

The Freehold and Leasehold Reform Act has not yet been formally implemented and won’t be until after the formation of the next Government, but it is now clear that major reforms for property ownership will be forthcoming in the short-term, no matter which party wins the election.

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