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Leasehold Law Reforms Included in the King’s Speech

Published by Chirag
Posted Date: October 30, 2023 , Modified Date: October 30, 2023

Housing minister Rachel MacLean has confirmed that a bill to phase out some leaseholds in England and Wales will be included in the King's Speech on 7 November. The speech will set out government plans for the coming year for some leasehold law reforms.

Ministers have long-promised to change the controversial leasehold system, which has seen expensive fees imposed on homeowners. The bill is expected to ban leaseholds for new houses but not new flats.

Ban on New House Leaseholds

The housing department estimates that there are almost 5 million leasehold homes in England, with 70% of them being flats. The proportion of new-build houses sold as leaseholds has fallen from a 15% high in 2016 to just 1% in December 2022.

In a social media post, Ms. MacLean said the new bill for the leasehold law reforms would "restore true home ownership to millions of people and end the reign of rip off freeholders + incompetent profiteering management companies."

She did not provide further details but posted a link to a piece in the Sunday Times, which said that following a consultation, the government would cap all existing ground rents at a very low rate, known as a "peppercorn" rate. Ground rents for properties sold after June 2022 are already capped. The government will also change the standard contract Lease extension from 90 years to 990 years.

leasehold law reforms

When a leasehold flat or house is first sold, a lease is granted for a fixed period of time. People may extend their lease or buy the freehold, but this is often an expensive and lengthy process.

Labour's shadow housing minister Matthew Pennycook dismissed the government's plans, saying: "If this thin gruel is all we're getting in the King's Speech, leaseholders will have been failed." He said Labour would "fundamentally and comprehensively reform the leasehold system."

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Hope for Homeowners

Responding to the government's plans, housing campaigner Harry Scoffin said the ban on leaseholds should be extended to include flats. He said abolishing existing ground rents was a "radical" plan which would "slash" costs but added: "We need far more to liberate flat leaseholders."

The new leasehold law reforms are also expected to make it easier and cheaper for homeowners to extend their lease or buy a freehold. It is expected to be introduced to Parliament before Christmas, however making changes to the property market can be complicated, and the bill could face a tricky journey before becoming law.

Chirag
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