Ian Levy Welcomes Leasehold Reform.
On the 27th of November our Conservative government introduced a new bill to Parliament, entitled the Leasehold and Freehold Reform Bill.
This Bill will deliver the Government’s 2019 manifesto commitments on leasehold reform and promote fairness and transparency in the residential leasehold sector.
These reforms build on the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for new, qualifying long residential leasehold properties in England and Wales.
This Bill will go further and make changes to improve home ownership for millions of leaseholders in England and Wales.
As many of you know last month I was appointed as PPS to the Department for Levelling up, Housing, and Communities.
This was due to my previous work in the Cabinet Office, and then two years in the MoD, as well as my successful lobbying for almost £400 million pounds in levelling up funding for our area.
This department covers a whole range of topics from local government to our mission to invest in 'left behind' town across the country.
However, my first priority was raising the issues of Leaseholds in Cramlington to the Housing Minister.
I know from my conversations with residents and local councillors just how much of an impact this has had on my constituents, and I am glad to be able to update you on the progress we have made.
Summary of the measures in the Bill
The Bill will empower leaseholders by:
• Making it cheaper and easier for existing leaseholders in houses and flats to extend their
lease or buy their freehold - so that leaseholders pay less to gain security over the future of
their home.
• Increasing the standard lease extension term from 90 years to 990 years for both houses
and flats, with ground rent reduced to £0 – to ensure that leaseholders can enjoy secure,
ground rent free ownership of their properties for years to come, without the hassle and expense
of future lease extensions.
• Removing the requirement for a new leaseholder to have owned their house or flat for two
years before they can benefit from these changes - so that more leaseholders can exercise
their right to the security of freehold ownership or a 990-year lease extension as soon as possible.
• Increasing the 25 per cent ‘non-residential’ limit – currently preventing leaseholders in buildings with a mixture of homes and other uses such as shops and offices from buying their freehold
or taking over management of their buildings, to instead allow leaseholders in buildings with up
to 50 per cent non-residential floorspace to buy their freehold or take over its management.
The Bill will improve leaseholders’ consumer rights by:
• Requiring transparency over leaseholders’ service charges – so all leaseholders receive
better transparency over the costs they are being charged by their freeholder or managing agent
in a standardised comparable format and can scrutinise and better challenge them if they are
unreasonable.
• Replacing buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees – to stop leaseholders being charged exorbitant,
opaque commissions on top of their premiums.
• Scrapping the presumption for leaseholders to pay their freeholders’ legal costs when
challenging poor practice.
• Grant freehold homeowners on private and mixed tenure estates the same rights of redress as leaseholders – by extending equivalent rights to transparency over their estate
charges, access to support via redress schemes, and to challenge the charges they pay by taking a case to a Tribunal, just like existing leaseholders.
As announced in the King’s Speech, the Government will also introduce amendments to the Bill
when Parliamentary time allows to:
• Make buying or selling a leasehold property quicker and easier - by setting a maximum
time and fee for the provision of information required to make a sale (such as building insurance or financial records) to a leaseholder by their freeholder (known as ‘landlords’).
• Extend access to “redress” schemes for leaseholders to challenge poor practice - by
requiring more freeholders to belong to a redress scheme so leaseholders can challenge
them if needed.
• Build on the legislation brought forward by the Building Safety Act 2022 – to protect
leaseholders and ensure freeholders and developers are unable to escape their liabilities to
fund building remediation work by extending the measures in the Building Safety Act 2022 to
ensure it operates as intended.
• Reform the leasehold market by banning the creation of new leasehold houses - so
that, other than in exceptional circumstances, every new house in England and Wales will be
freehold from the outset.
• (subject to consultation) cap existing ground rents - to ensure that all leaseholders are protected from making payments that require no service or benefit in return, have no requirement to be reasonable, and can cause issues when people want to sell their properties
_
In summary, I am confident this bill will do a lot of good for our residents who are leaseholders, as well as for future homeowners up and down this country.
If you have any questions or you would like any further information, feel free to contact me on:
[email protected] and include ‘Leasehold Reform’ in the subject.
Best Wishes
Ian
