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On the 7th of November, the King delivered his first King's Speech setting out the Government's planned legislative agenda for the 2023/24 parliamentary session. While once again, not receiving the attention the well-documented housing crisis requires, there was at least a commitment to reform some areas of the housing and property sector. The King announced two legislative agendas: The Leasehold and Freehold Bill and The Renters (Reform) Bill.
The Leasehold and Freehold Bill
The Bill aims to reform leasehold by making it easier and cheaper for leaseholders to extend their lease or buy their freehold; abolish punitive service charges; deliver greater security of tenure for leaseholders; and give certainty to landlords that they can recover their property when needed. In particular, the bill tackles 3 main areas.
Firstly, to make it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold, secondly to improve the consumer rights of leaseholders and thirdly to reform the leasehold market by banning the creation of new leasehold houses.
The proposals to reform the private leasehold sector are welcomed as it has largely been regarded as unchecked and culminated with the Competition and Markets Authority launching its investigation into leaseholds in 2019. However, there are concerns these proposed changes do not go far enough. Less than 1% of new-build houses sold, as of December 2022, were leasehold. This means the proposal to ban newly built leasehold houses will have a negligible effect on the property market as a whole.
Additionally, we question whether further regulation of the private rented sector through the expansion and rebranding of the Regulator of Social Housing would be more effective. While there is already the Private Rented Ombudsman, this only relates to disputes and does not provide proactive regulation or framework requirements for landlords, which could help to tackle the issue of substandard accommodation and out-of-control rent. Such a regulator could incorporate the Decent Homes Standard referred to in the Levelling Up white paper in 2022.
Renters Reform Bill
The Renters Reform Bill was introduced to Parliament on the 17th of May 2023, aiming to introduce ‘once-in-a-generation reforms’ to the residential sector as outlined in the Fairer Private Rented Sector White Paper. In the King's Speech, the Government reiterated its commitment to the Renters Reform Bill. The changes will affect new residential tenancies.
One of the most ambitious aims of the Bill is to end no-fault evictions. However, it is argued that without meaningful reform to the civil courts, it will be difficult to end no-fault eviction as fault will need to be proven by the parties with witnesses, increasing the burden on the civil courts.
We await more detailed legislation and guidance to display how the Government intends to bring these proposals to fruition. Whilst it can be argued that these reforms do not go far enough there does appear to be an emphasis on fairness, with an attempt to balance power away from freeholders and landlords to leaseholders and tenants.
For more information on our Residential Property services, contact Frank Smith & Co Solicitors on 01242 801748 or visit here.
