Following its first reading on 27 November 2023, The Leasehold and Freehold Reform Bill is now working its way through parliament.
The Bill had its Second Reading in the House of Commons on 11 December 2023, receiving almost unanimous cross-party support.
The Bill is the second part of a legislative package to reform leasehold law. It follows on from the Leasehold Reform (Ground Rent) Act 2022, which put an end to ground rents for most new residential leasehold properties in England and Wales.
Key proposals of the Bill include reforms to valuation (including the removal of marriage value), increasing standard lease extension terms to 990 years, as well as other measures to reduce the amount payable by those looking to enfranchise.
These proposed valuation changes include restrictions on the ability of landlords to recover costs and also fundamental changes to the valuation mechanism – such that freeholds will be valued on a ‘market value’ basis. This will mean effectively a ‘term and reversion’ calculation in all cases with the added assumption that the ground rent does not exceed 0.1% of the value of the property (regardless of whether this is the case or not).
All of these changes will reduce the amount that the freeholder will recover if their interest is acquired.
There are also proposals to deal with intermediate landlords’ interests along with other proposals aimed at reducing the amount to be paid.
The Bill will now move to the Committee stage next week where it will be examined by the Public Bill Committee which will scrutinise the Bill line-by-line and is expected to report back to the House of Commons by Thursday 1 February 2024.
Amendments will then be considered before the Bill returns to the Commons for a Third Reading.
We await with interest the outcome of the committee stage where further amendments and detailed comments will be put forward.
Contact our Landlord & Tenant Solicitors
For more information, please email leasehold@bishopandsewell.co.uk or call Bishop & Sewell’s Landlord & Tenant team on 0207 631 4141.
The above is accurate as at 12 January 2024. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
