07/12/2023
The King’s Speech: Leasehold and Freehold Bill
In the first King’s Speech on 7 November, King Charles III spoke about the forthcoming Leasehold and Freehold Bill that will apply in England and Wales.
King Charles said: “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 Background Briefing to the speech gives more information about the proposed bill, which is intended to address one of the longest-term challenges that the country faces: fairness in the housing market. It will do this by:
- Making it cheaper and easier for existing leaseholders in houses and flats to extend their lease or buy their freehold;
- Increasing the standard lease extension term from 90 years to 990 years for both houses and flats, with ground rent reduced to £0;
- Removing the requirement for a new leaseholder to have owned their house or flat for two years before they can benefit from these changes;
- Increasing the 25 per cent ‘non-residential’ limit 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;
- Requiring transparency over leaseholders’ service charges;
- Replacing buildings insurance commissions for managing agents, landlords and freeholders with transparent administration fees;
- Requiring more freeholders to belong to a redress scheme so leaseholders can challenge them if needed;
- Scrapping the presumption for leaseholders to pay their freeholders’ legal costs when challenging poor practice;
- Granting freehold homeowners on private and mixed tenure estates the same rights of redress as leaseholders; and
- Banning the creation of new leasehold houses.
The legislation will be designed to support the housing market. Government data suggests that 22% of residential property transactions in 2019 were leasehold. 49% of leaseholders are first-time buyers and 28% of leaseholders are under 35.
For further information on the Leasehold and Freehold Bill, please contact us on 023 8046 1254 or email Tom Young.
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