There are some key legislative changes set to come into force in 2024 with one significant change to the property sector which will affect millions of homeowners. In November 2023, King Charles III delivered the first King’s Speech in more than 70 years, with some new property bills announced.
In a bid to support the Bank of England in bringing down inflation towards the two percent target, the King said that the Conservative Party will continue to take action by introducing new laws. The King’s Speech featured 20 bills and one draft bill, including some that have been carried over from the last parliamentary session to complete their passage in the next.
One of the key bills in the property sector is the Leasehold and Freehold Reform Bill, which has this week concluded its clause-by-clause consideration in the House of Commons at the Committee stage. It is now awaiting a date to be reported back to the House of Commons in the Report stage.
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Currently, if your property is a leasehold, you own the house but not the building or land it sits on, which means you pay ground rent to the freeholder. The proposed new law would see this form of homeownership banned, meaning anyone who buys a new home going forward will own the building as well as the land it sits on.
The new Bill is set to improve homeownership for millions of leaseholders in England and Wales by making it cheaper and easier for more leaseholders to extend their lease, buy their freehold, and takeover management of their building.
The new laws would increase the standard lease extension term from 90 years to 990 years for both houses and flats, with ground rent reduced to £0. This would 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.
It would also fully ban 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. The bill would also remove the requirement for a new leaseholder to have owned their house or flat for two years before they can benefit from these changes.
Giving an update on the bill, Linz Darlington, who is managing director of lease extension specialists Homehold said: “Despite speedy progress through the House of Commons the Leasehold and Freehold Reform Bill in its current state it still fails to meet many of its policy objectives.
“When introduced, the bill failed to abolish new leasehold houses, which was a key policy objective. Following reporting from the mainstream press, the Government promised to amend it to do this. However, despite over 50 new clauses being proposed and countless amendments, they failed to table wording to ban developers selling new houses on a leasehold basis.
“Equally, the bill doesn’t yet make it cheaper for people to extend their leases or buy their freeholds. It is still missing the key components and rates, which will be set later by the Secretary of State.
“Not one of the new clauses proposed to the bill was agreed, all either rejected or withdrawn. Unless we see significant changes to the bill before it leaves the Commons for the Lords, leaseholders are unlikely to see the benefit from this bill that they are hoping for.”