What Has Happened So Far?Recent updates from the Government and the FCA stem from a multitude of consultancies undertaken by the Government since their 2017 commitment to reviewing the system. Since then, seven consultancies have taken place covering:
- Tackling unfair practices in the leasehold market (2017)
- Protecting consumers in the letting and managing agent market (2018)
- Implementing reforms to the leasehold system in England (2019)
- Strengthening consumer redress in housing (2019)
- Redress for purchasers of new build homes and the New Homes Ombudsman (2020)
- Reforming the leasehold and commonhold systems in England and Wales (2022)
- Modern leasehold: restricting ground rent for existing leases (2023)
“The Leasehold and Freehold Reform Bill, introduced to Parliament today, will make it easier and cheaper for leaseholders to buy their freehold, increase standard lease extension terms to 990 years for houses and flats, and provide greater transparency over service charges. The Bill will also rebalance the legal costs regime and remove barriers for leaseholders to challenge their landlords’ unreasonable charges at Tribunal. The new powers will also help more leaseholders take over the management of their property if they wish to, instead of being stuck with the freeholder’s management choice, and we will make this process cheaper for leaseholders.” The Leasehold Advisory Service
What Changes Are Being Made?Full guidance on the changes can be found on the Government website, but the headlines are here: Lease Extensions:
- The bill makes it easier and cheaper for leaseholders to extend their leases, with ground rent brought down to a peppercorn and marriage value abolished.
- You no longer need to have own your property for 2 years to be able to extend your lease under the new rules.
- The standard lease extension term has been increased to 990 years.
- The bill makes it easier and cheaper for leaseholders to buy the freehold of their property, to appoint a managing agent of their choice, or to exercise their enfranchisement rights (as they will no longer need to pay the freeholder’s costs)
- The bill will ensure that service charge statements are clearer and provided in a standardised format so they can be compared and challenged more easily.
- Freeholders must belong to a redress scheme so that leaseholders can challenge their decisions in the same way they can for managing agents.
- The presumption that leaseholders should pay the legal costs of their freeholders when taking an issue to tribunal is abolished.
- Insurance commissions have been replaced with transparent admin fees.
- The bill sets out a maximum length of time for freeholders to supply leaseholders with the information they need to put their unit up for sale.
- Newbuild houses will no longer be allowed to be sold on a leasehold basis unless in exceptional circumstances.
So, What New Powers Do You Have as a Leaseholder in England and Wales?As you can see, the bill ultimately puts leaseholders back at the forefront, with your needs being highlighted at every juncture. You’ll now be able to challenge freeholder decisions through legal channels without the financial distress of covering their costs. You’ll be able to decipher your service charge statements and challenge them more easily. You won’t need to extend your lease multiple times at huge cost. You’ll be able to take over the management of your building far more easily, if you and your fellow leaseholders so wish. It’s a new world for leaseholders who have been crying out for a fairer system for years. Housing Secretary, Michael Gove summarised the bill:
“Today marks a landmark moment for millions of leaseholders across the country, as we unveil laws to deliver significant new rights and protections, slash unfair costs and crack down on exploitation.”
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