Monday 20th November 2023
Homeowners and investors will no doubt have paid attention to the King’s Speech on November 7, their interest piqued by a number of Law Commission recommendations, including the abolition of marriage value in relation to lease extensions and a term of years lasting 990 years, rather than the current 90 years, when leases are extended.
What will the Leasehold and Freehold Bill do if/when it comes into force?
The Bill aims to make it easier and less expensive for leaseholders to purchase their freehold as well as extend their lease, and to tackle escalating ground rents and punitive service charges.
If/When the Bill becomes law, it aims also to set out a simpler route for leaseholders to take over management of their building.
Standard lease extension term increasing
Under current proposals, this will increase from 90 years to 990 years for both houses and flats, with ground rent reduced to £0.
Is there still to be a minimum period before leaseholders can apply for an extension?
The requirement for a new leaseholder to have owned their flat for two years is set to be removed, so leaseholders can exercise their right to claim a 990-year lease extension as soon as they are registered as owners of the property at Land Registry.
In addition, the Bill will make buying or selling a leasehold property quicker and easier, by setting a maximum time and fee for the provision of information required to make a sale (such as building insurance or financial records) to a leaseholder by their freeholder (known as ‘landlords’).
When will the reforms become law?
At this stage, the Bill has only been announced, and it is unclear if/when it will become law. It is possible that not all the reforms mentioned in The King’s Speech will make it into the final Bill, nor is it guaranteed that the Bill will receive Royal Assent and pass into law before the next general election.
Transparency over leaseholders’ service charges
All leaseholders will see increased transparency over the costs they are being charged by their freeholder or managing agent in a standardised comparable format and can scrutinise and better challenge them if they are unreasonable.
The King’s Speech briefing notes can be read here.