Second reading of Leasehold and Freehold Bill

The second reading of the much heralded Leasehold and Freehold Bill is to have its second reading in Parliament today (11th December). 

The bill was released just weeks after the King’s Speech and was lauded by pressure groups as “momentous,” however it an embarrassing omission from the government, it acknowledged that a key element of the legislation was missing. The government said it’s lawyers had not had time to include a section banning the sale of new leasehold properties.

The Law Society of England and Wales have broadly “welcomed” the commitment to leasehold reform, but warn that it must include the detail promised.

“Once the missing provisions have been included, the Bill could impact millions of homeowners and home buyers in England and Wales and could make improvements to the home buying and selling process. We would have been pleased to see more provisions in relation to the regulation of all kinds of property agents to assist the home buying and selling market.

“Proposals to require more transparency for both financial and non-financial information provided to leaseholders are welcome. Providing these in a standardised format for service charges would be a useful step. We support the general commitment to make it cheaper and easier for existing leaseholders to extend their lease or buy their freehold.

“However, the Bill does not yet deliver on the government’s commitment to ban the sale of new leasehold homes. Nor does it yet set out the provisions for making buying or selling a leasehold property quicker and easier, by setting a maximum time and fee for the freeholder to provide the information required to make a sale. It also doesn’t yet require freeholders, who manage their building directly, to belong to a redress scheme or protect leaseholders by extending the measures in the Building Safety Act 2022 to ensure it operates as intended.

“We welcome the government’s commitment to deliver on these proposals by amending the Bill as it makes its way through Parliament.”

said Law Society president Nick Emmerson.

The Association of Leasehold Enfranchisement Practitioners (ALEP), a group which represents a wide range of leasehold enfranchisement practitioners, including both lawyers and surveyors, has indicated its support for the bill.  At ALEP’s annual conference in October, 77% of attendees agreed that the leasehold system is in need of reform.

The association has said it “has supported the Government over several years as it edged towards leasehold reform” but warned that “leasehold reform is an extremely complex area of law and not one which should be rushed towards Royal Assent in the final months of the current Government.”

Commenting on the draft Bill, Mark Chick, director of ALEP said,

“As the Leasehold and Freehold Bill approaches its Second Reading, ALEP members will be waiting with bated breath. The Bill is complete game-changer for landlord and tenant law. Not only is it a game changer in terms of shifting the costs, burdens and responsibilities between the two parties, but the Bill also makes sweeping changes to valuation.”

“We recognise and appreciate that it is the Government’s stated aim to make the leasehold process cheaper and easier but leasehold enfranchisement practitioners question whether the Bill, in its current draft, will do this fully and  effectively.”

On the subject of proposals to change the way legal and valuation costs are apportioned Chick added

“Should, as we understand the Government is proposing, freeholders be required to pay the legal costs if leaseholders choose to enfranchise, this will be the only instance of a compulsory acquisition whereby the party whose interests are being purchased does not have their costs paid –compare for instance with the compulsory purchase legislation , for example, where the costs are paid by the acquiring party.”