Big changes for homeowners and tenants with updates on major reforms

Major announcements on new property sector reforms have been made this month, with leasehold owners set to benefit but not tenants.

After months of movement through Parliament, the Leasehold and Freehold Reform Act has become law, ushering in new rights powers and protections for homeowners, but with the General Election now looming, the Renters Reform Bill has been shelved. Here’s what you need to know:

The Leasehold and Freehold Reform Act

Brought forward by the government with the aim of targeting inequality in the country’s housing market through the introduction of new and strengthened rights for leasehold homeowners, including:

• Making it cheaper and easier for long leaseholders to extend their lease or buy their freehold;
• Increasing the standard lease extension term to 990 years for both houses (from 50 years) and flats (from 90 years);
• Providing greater transparency for leaseholders over service charges through standardised freeholder and managing agent companies;
• Making it easier and cheaper for leaseholders to take over management of their building;
• Requiring freeholders to belong to a redress scheme, giving leaseholders more ability to challenge poor practice;
• Setting a maximum time and fee for provision of home buying and selling information;
• Giving homeowners on private and mixed-tenure estates more comprehensive rights to receive information on what charges they pay and the ability to challenge how reasonable these are;
• Banning opaque and excessive buildings insurance commissions for freeholders and managing agents;
• Banning the sale of new leasehold houses so that, other than in exceptional circumstances, every new house in England and Wales will be freehold from the outset;
• Removing the requirement for a new leaseholder to have owned their house or flat for two years before they can extend their lease or buy their freehold.

Whilst all the above will be welcome news to leaseholders, the Act falls short of expectations in that it did not remove, or cap, ground rents for existing leaseholders, nor ban the practice of forfeiture (termination) of leases for non-payment of nominal ground rent.

The Renters Reform Bill

Having also journeyed through the Houses of Parliament, this Bill was expected to be introduced into law this year, but with the announcement of the General Election in July, not enough time remained to see the legislation through to Royal Assent.

The Bill was, alongside a raft of other changes, set to fulfil the government’s pledge to abolish Section 21 ‘no-fault’ evictions - the process by which landlords can bring Assured Shorthold Tenancies (‘ASTs’) to an end and require a tenant to vacate at the end of the contractual term.

Simon McIlroy, Legal Director in the Thrings Property Litigation team, said: “Opinions on these two announcements will be quite polarising for different groups within the sector, with homeowners no doubt delighted to have more protections and powers regarding their property, but renters understandably left deflated with this sudden abandonment of reforms that would have given them much more security in their homes.

“The changes outlined in the Leasehold and Freehold Reform Act will go a long way to make processes simpler, more affordable and more transparent, but they will take some time to bed in so it is recommended that anyone impacted by these changes – whether a leaseholder, freeholder or even management company – should seek legal advice at the earliest possibility.

“As for the Renters Reform Bill, I anticipate this will come up a lot on the campaign trail, given it is an impactful issue for the public, and look forward to seeing whether any real movement takes place once the dust settles.”

Thrings’ Property Litigation lawyers are experienced in reaching resolution in property disputes, acting for both landlords and tenants, often without recourse to court proceedings, and with an excellent track record when cases do go to Court. To find out more, get in contact.