It has indeed been a while since the Government expressed its intention to implement a prohibition on the sale of leasehold houses and to place a cap on ground rents in residential long leases and whilst the last couple of weeks has seen at least two big announcements within the leasehold sector, is change really likely to come soon?
The first piece of hot news for the leasehold world came with the publication of report of the working group chaired by Lord Best, who has been an independent crossbencher of the House of Lords since 2001. He has extensive experience from his years working across the housing sector and the working group was tasked with:
Developing advice for government on a model for an independent property agent regulator, including how it would operate and how it will enforce compliance;
- a single, mandatory and legally-enforceable Code of Practice for property agents;
- a system of minimum entry requirements and continuing professional development for property agents; and
- exploring fees, charges and ability to choose a managing agent for leaseholders and freeholders.
The final report was published on 18th July 2019 and a link to the full report can be found here:
The second hot news was the Government’s response to the Housing Communities and Local Government Select Committee Report on leasehold reform issued earlier this year. Many of the proposals set out in the responses are in line with the Select Committee’s recommendations including, the cap on ground rents being set at a peppercorn. However, the Government has not acted (although the position has not been ruled out completely) on the Select Committee’s suggestion that the cap on ground rents could be made retrospectively and therefore apply to existing leases.
The Government’s recent response confirms its intention to implement reforms with the aim of the following:
- Give clearer information to consumers on the buying and selling of leasehold properties
- Give consideration to the Select Committee’s view that the system of commonhold should be the primary model of ownership
- Work with developers to standardise documents with ‘key features’ which ensure consumers know what they are buying
- Provide that ground rent be zero in future leases
- Ensure the Law Commission considers the issue of unfair terms
- Clarify planning guidance between developers and councils so it is clear what public areas and utilities will be adopted
- Consider the issue of permission fees and other charges
- Consider how to challenge unjustifiable legal costs
- Review the law of forfeiture
- Ensure all freeholders of leasehold properties are members of a redress scheme
- Implement improvements to enfranchisement as soon as possible
A full copy of the report is here:
Details will need to be worked through and decisions made as to whether and to what extent reforms will be retrospective or of application only to new leases. Whilst the Government has confirmed it commitment to introducing legislation as soon as parliamentary time permits it does caveat its response warning that that leasehold reform is highly complex, and it is important to get it right and without unintended consequences.
For further information, please contact Yashmin Mistry, Property Practice Group Leader on email: ymistry@jpclaw.co.uk or telephone: 0207 644 7294 or contact her on LinkedIn.
