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The Leasehold and Freehold Reform Bill was fast-tracked through the House of Lords on Friday and given Royal Assent.
The bill will make it easier for leaseholders to buy out their freehold or extend their leases, and will extend the standard lease term from 90 years for apartments and 50 to 990 years for houses.
The bill would abolish leasehold on new houses but not on apartments, but would allow leaseholders to challenge inappropriate freeholder practices through a compensation scheme, which freeholders would be required to take part in.
One thing the Bill is missing is no cap on ground rents, despite being pushed for by the outgoing Housing Secretary Michael Gove.
“This legislation introduces many welcome changes,” said Scott Goldstein, a partner at Payne Hicks Beach, “continuing progress toward achieving fairer rates for renters.”
Other aspects included in the Act include:
• Increase transparency of tenant service charges by allowing tenants or management agencies to issue invoices in a standardized format
• Making it easier and cheaper for leaseholders to undertake the management of their premises and allowing them to appoint the management company of their choice.
• It will be less costly for leaseholders to exercise their enfranchisement rights as they will not have to pay the freeholder’s costs when making a claim.
• Make buying and selling rental properties faster and easier by setting maximum times and fees for home buying and selling information.
• Give homeowners on private and mixed property comprehensive rights of relief, receiving more information about the fees they are paying and the right to challenge how reasonable the fees are.
• Abolish the presumption that tenants will pay the freeholder’s legal costs when challenging unfair practices, which acts as a deterrent to tenants challenging service charges.
• Ban opaque and excessive building insurance fees for building owners and managers and replace them with transparent and fair fees.
• Ban the sale of new leasehold homes so that all new homes in England and Wales are freehold from the start, except in special circumstances.
• Remove the requirement that new tenants must own a house or apartment for two years before they can extend their lease or buy the freehold.
Ian Fletcher, director of property policy at the British Property Federation, said: “Few freeholders or leaseholders are happy about this.”
“As many Members of the House of Lords have passionately expressed this afternoon, this Bill has not undergone proper scrutiny. This Bill seriously infringes on legitimate property rights.”
“This Bill does not address some of the key issues facing renters. Many promises were made that in some cases were not delivered, and thankfully, they were not delivered because it would have caused great damage to the tenancy system.”
“There will be tenancy reform in the future, but we hope that it will be looked at in a more comprehensive and coordinated way.”