Leasehold property reforms introduced to Parliament

The Leasehold and Freehold Reform Bill has been introduced to Parliament, which seeks to afford new protections and rights to homeowners.

The reforms seek to increase the rebalance the rights and protections of the owners of leasehold residential property owners and freeholders through reducing costs, giving homeowners a greater say over property management, and requiring greater transparency over service charges.

Among the proposals include increasing standard lease extension terms to 990 years for both houses and flats, currently just 50 years for houses, and 90 for flats, as well as removing barriers to challenging a freeholders unreasonable charges at Tribunal. Proposals will also extend access to redress schemes, with all freeholders to be required to sign up, and make it easier and cheaper to get the information needed to sell a leasehold home.

Freeholders and property management companies will be required to present bills in a standardised format, making it easier for leaseholders to see how their service charges are being spent. Leaseholders will also have greater powers to take over management of a property if they are unhappy with their landlord’s choice. Homeowners in mixed use developments will also be able to take over management on these schemes if commercial floorspace does not exceed 50% of the total – current rules bar homeowners doing this if just 25% of the building is given over to flats or offices. Rights to challenge charges will also be updated for homeowners on private and mixed tenure estates, with leaseholders and freeholders having equal rights. New rules being introduced to Parliament will also end the sale of leasehold new-build homes in England and Wales, other than in exceptional circumstances.

Ahead of the Bill’s introduction, the Housing Secretary, Michael Gove said:

“People work hard to own a home. But for far too long too many have been denied the full benefits of ownership through the unfair and outdated leasehold system.

“That’s why liberating leaseholders forms a vital part of the Government’s Long-Term Plan for Housing.

“So 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.“

The Government is also consulting on options to cap ground rents for existing leases that will protect leaseholders from facing unregulated ground rents for no service in return.