Summary
The first King’s Speech of the new Labour Government was delivered on 17 July 2024, bringing with it a renewed focus on the living sector including renters’ rights and the promise of further residential leasehold reform. You would be forgiven for experiencing a sense of déjà-vu following our report on the November 2023 King’s Speech Reforming the Housing Market: A word from the King (cms-lawnow.com), but a new Renters’ Rights Bill has been announced along with a new Leasehold and Commonhold Reform Bill. Additionally, an intention to bring into force the provisions of the Leasehold and Freehold Reform Act 2024 has been confirmed.
The Bills
Leasehold and Commonhold Reform Bill (“LCR Bill”)
The LCR Bill aims to build on the progress made by the Leasehold and Freehold Reform Act 2024 which we reported on in May The Leasehold and Freehold Reform Act is here (just) (cmslawnow.com). The LCR Bill will apply to England and Wales.
The LCR Bill will:
- Enact the remaining Law Commission recommendations to bolster residential leaseholders’ rights including around enfranchisement and right to manage (see our previous Law-Now’s which considered these recommendations The Law Commission presents options to reduce premiums payable on leasehold enfranchisement (cmslawnow.com) and Law Commission Reform: Buying your freehold or extending your lease (cms-lawnow.com) and The Law Commission recommends a simpler, cheaper and more flexible approach to RTM Claims (cms-lawnow.com)).
- Reinvigorate commonhold by modernising the legal framework. This includes an intended consultation on restricting the sale of new leasehold flats. See our previous Law-Now on the Law Commission’s proposals on commonhold Law Commission Report on proposed changes to Commonhold (cms-lawnow.com)
- Regulate existing ground rents for residential property (see our previous Law-Now on the Conservative Government’s consultation on capping existing ground rents Government Consultation on capping existing ground rents (cms-lawnow.com)).
- Implement the new protections in the Leasehold and Freehold Reform Act 2024 for freehold homeowners who contribute towards estate costs.
- “Ending the injustice of forfeiture” so that residential leaseholders are protected against losing their home and savings in their home for potentially small unpaid debts.
In addition, the Government will implement the Leasehold and Freehold Reform Act 2024 so that leaseholders can benefit from more rights, power and protections over their homes.
It seems that Labour intends to finish what the Conservatives started by building on the Leasehold and Freehold Reform Act 2024, as well as moving forward the consultation for capping existing ground rents for residential property (though it is notable that no cap has been referred to in the King’s Speech).
The move to commonhold will affect developers and lenders alike. We know that the previous Government did a lot of work on commonhold behind the scenes, but securing sector buyin will be paramount if leasehold is to be removed as a home ownership tenure moving forward.
We anticipate that the Law Commission’s recommendations on the right to manage will now be implemented, as this was largely absent from the Leasehold and Freehold Reform Act 2024.
Renters’ Rights Bill (“RR Bill”)
The King’s Speech confirms the Government’s determination to press forward with Renters’ reform in the form of the Renters’ Rights Bill, notwithstanding that its predecessor (the Renter’s Reform Bill The Renters (Reform) Bill – Where are we now? (cms-lawnow.com)) did not make it through parliamentary wash up at the end of May 2024. The new RR Bill will apply to England.
A key stated policy objective of the RR Bill is to address the situation where too many renters are exploited by a minority of unscrupulous landlords, unable to challenge bad practices because they could be evicted at any moment. This, the Government states, is bad for economic growth and productivity, poor for health, and a drain on aspiration.
The key features of the RR Bill will be as follows:
- Abolishing Section 21 “no fault evictions” removing the threat of arbitrary evictions and increasing tenant security and stability. New expanded possession grounds will be introduced, so that landlords can reclaim their properties when they need to.
- Strengthening tenants’ rights and protections e.g. by empowering them to challenge rent increases, and introducing new laws to end the practice of rental bidding wars by landlords and letting agents.
- Giving tenants the right to request a pet, which landlords must consider and cannot unreasonably refuse.
- Applying a Decent Homes Standard to the private rented sector.
- Applying “Awaab’s Law” to the sector, which currently requires landlords of social housing to investigate hazards and take steps to remediate or rehouse occupiers, following the tragic death of Awaab Ishak. The effect of the RR Bill will be to set clear legal expectations about the timeframes within which landlords in the private rented sector must make homes safe where they contain serious hazards.
- Creating a digital private rented sector database to bring together key information for landlords, tenants and councils.
- Introducing a new ombudsman service for the private rented sector that will provide fair, impartial and binding resolution, to both landlords and tenants and reducing the need to go to court. Perhaps this is intended to overcome some of the constraints in the court system that were an obstacle to the implementation of the previous Renters’ Reform Bill.
- Making it illegal for landlords to discriminate against tenants in receipt of benefits or with children when choosing to let their property.
- Strengthening local councils’ enforcement powers to identify and fine unscrupulous landlords.
There is nothing in this set of proposals that will come as a particular surprise. Whilst it has been indicated that Labour may go further than the previous Renters’ Reform Bill, the detail is awaited and we will report on the draft RR Bill once published.
Click here for further details of the King’s Speech 2024.
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