Renters Reform Bill abandoned but Leasehold & Freehold Reform Act becomes law

The sudden and unexpected announcement by Rishi Sunak that a General Election will take place on 4th July has resulted in the hotly debated Renters Reform Bill being scrapped…..for now.

Parliament had a limited amount of time during the ‘wash-up’ process to force the Bill through before dissolution. However, due to the Bill’s complexity and controversy it didn’t advance sufficiently to gain Royal Assent and become law. The result being that the Bill has been abandoned and the successive Government will have to start again. Whether the Conservatives remain in power, or Labour win the majority a new version of the Renters Reform Bill will undoubtedly appear at some point.

The Leasehold & Freehold Reform Act took a different path and made it through the ‘wash-up’ process to receive Royal Assent and has now become law. Whilst the Act is now law it is yet to come into effect. The exact timings of the implementation of the Act will be down to the new Government to decide, post election. Until then, the current law surrounding leasehold properties remain in place.

The key principles of the Leasehold & Reform Act are:

Increasing the standard lease to 990 years. Currently you have to have owned the property for 2 years before you are able to extend a lease. Whilst the Act will remove the 2 year restriction, there should be little requirement for it if the standard lease is going to be 990 years. 

Removing the marriage value towards the end of the lease. If a lease has less than 80 years remaining on it, it can cost almost double the amount to extend it vs a lease of more than 80 years. 

Quicker and easier to buy or sell. On average it takes 50% longer to sell a leasehold property than a freehold because there are usually more parties involved. 

Transparency over service charges and administration fees. Some managing agents have been guilty of charging ridiculously large fees. 

Ground rents are paid by leaseholders to freeholders every year. The Bill plans to cap ground rents to £250 (£1,000 inside London).

New leasehold houses will be banned. There will be some exemptions such as shared ownership and National Trust properties.

Build on the legislation brought forward by the Building Safety Act 2022, ensuring freeholders and developers are unable to escape their liabilities to fund building remediation works.

For more information and updates go to www.elloproperty.co.uk