Property Sector Braces for Renters (Reform) Act and Leasehold Sale Changes

In a significant parliamentary address, King Charles confirmed the Government’s commitment to advancing two pivotal reforms within the property sector. These reforms include the introduction of the Renters (Reform) Act, set to overhaul rental management, and the prohibition of leasehold house sales, though this does not extend to apartments.

King Charles stated in his speech, “Renters will benefit from stronger security of tenure and better value while landlords will benefit from reforms to provide certainty that they can regain their properties when needed.”

The speech also addressed leasehold issues, with the King noting the Government’s plan to “reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of homeowners through punitive service charges.” This builds on the Government’s earlier move to eliminate unfair ground rents.

The proposed changes have sparked debate among Conservative MPs, with potential revolts looming. The Renters (Reform) Bill, particularly its provision to ban Section 21 notice evictions, has been delayed pending improvements to the overburdened courts system, following interventions from the NRLA and industry figures like Paul Shamplina.

The Government’s modified stance on leasehold reform, now focusing solely on the sale of leasehold houses, has also stirred potential dissent within Tory ranks.

RICS has welcomed the government’s pledge to abolish ‘no-fault’ evictions and recognizes the necessity for court reform. However, the absence of a clear timeline for these changes offers little solace to renters facing increased rents and limited housing options amidst a shortfall in new housing.

On leasehold reform, RICS commends the legislative moves to alleviate the burden on leaseholders and ensure fair service charges, also endorsing the introduction of a new Ombudsman to bolster tenant protections against landlord malpractice.

The King’s Speech failed to provide concrete details on the Renters (Reform) Bill, as noted by Jonathan Daines, Founder and CEO of lettingaproperty.com. He stressed the importance of balancing tenant protection with the needs of responsible landlords, who may be affected by additional compliance demands.

Rob Poole from Glide, part of Leaders Romans Group, expressed reservations about replacing leasehold with commonhold, particularly in managing large blocks where dispute resolution could become intractably complex.

Samuel Lear of Charles Russell Speechlys highlighted the critical need for the renting reform legislation to maintain an equitable balance between landlord and tenant rights, warning that failure to do so might prompt landlords to exit the market, exacerbating supply issues.

Timothy Douglas, Head of Policy and Campaigns at Propertymark, welcomed the Government’s recognition of the need for leasehold system reform and the protection of landlord rights, which are crucial before implementing major changes to England’s private renting landscape.