We have from the King’s Speech on 7th November 2023 that there will be a bill to ‘reform the housing market and to make it cheaper and easier for leaseholders to purchase their freehold and to protect leaseholders form punitive service charges.’
So, what does all this mean?
A number of the predictions previously mentioned have ‘come true’ …
990-year lease extensions
We have the confirmation that lease extensions will be increased from 90 to 990 years with a zero ground rent.
No more 2-year ownership rule
We have confirmation of the removal of the requirement to have owned a property for at least two years before seeking a lease extension.
Changing the limit for mixed use buildings to 50%
The new bill will seek to increase the 25% threshold for mixed-use property to 50% so that property with that is up to 50% non-residential will now qualify for the right to enfranchise and the right to manage.
Banning leasehold houses
The long-promised ban on the creation of new leasehold houses ‘save in exceptional circumstances’ – this is not that much of a surprise.
And now the big one ..
Making it cheaper and easier for leaseholders to extend their lease or buy their freehold
What is not entirely clear is how the detail of ‘making it cheaper and easier’ will work in practice
The notes accompanying the speech state it will be made ‘cheaper and easier’ – the exact words given to the Law Commission in their terms of reference.
There is the mention of the consultation on capping ground rents – which if it were to become law would make it cheaper as presumably there would be a follow through into valuation calculations of the rent actually collectable rather than as written into the lease.
Banning marriage value
What is not said directly in the notes, but can be inferred and was confirmed by the Minister of State for Housing and Planning, Rachel Maclean MP at the APPG meeting on 7th November is a commitment to ban marriage value.
A worked example is given at the end of the more detailed government notes accompanying the speech (page 47) and these appear to indicate that the cost of a £16,000 lease extension at 76 years would decrease to £9,000.
How this is to be achieved in practice is not spelt out, but it sounds like the removal of marriage value as this is the only likely factor that could give rise to this change. The note says that the leaseholder would pay only the reduced premium amount plus their own costs.’ Is there is a suggestion therefore that landlords may also be prevented from recovering their costs?
It is not clear therefore whether the plan to ban marriage value sits within this proposed bill, or whether this would be dealt with as part of a wider programme of reforming legislation.
Without any further detail or a draft bill at this stage, we can only guess at what the detail of this will mean.
For the full notes to the King’s Speech see:
See pages 45-47 of the full notes and the example at the end of page 47 of the full notes to the King’s Speech. The example quoted above is below:
Rachel MacLean addresses the APPG (All Party Parliamentary Group) on Leasehold Reform
Here are the relevant pages from the detailed notes to the King’s Speech in full
