With the election very much last week’s news, it seems like a good time to reflect on the first week of the new Labour government and what this may mean in the property sector and in leasehold more specifically.
The first few days have seen Sir Kier Starmer getting to grips with his new cabinet and making some early semantic changes in the property space with DLUHC now renamed as the Ministry of Housing, Communities and Local Government. All of this is no doubt very much part of the new administration getting ready for the run up to the next five years in power.
With that in mind, we can seek to look ahead to try to determine what the priorities will be for leasehold reform over the term of this Parliament.
The Labour manifesto commits the party to “bring the feudal leasehold system to an end” although an earlier pledge to do so within the first 100 days of taking office was dropped ahead of the General Election.
Labour has said it would enact the full package of Law Commission proposals on leasehold enfranchisement, right to manage and commonhold and “take further steps to ban new leasehold flats and ensure commonhold is the default tenure”. The manifesto also commits the Government to take action to tackle ground rent charges and unfair maintenance costs.
The party also proposed a series of amendments to the Leasehold and Freehold Reform Act 2024 during its passage and the Government could revisit some of the proposals put forward by the House of Lords, for example on forfeiture and repossession.
It is also a fairly safe bet that DHC has prepared alternative statutory proposals as part of the Law Commissions original recommendations and some of these could be dusted off for further consideration.
The Leasehold and Freehold Reform Act 2024 (‘the 2024 Act’) received Royal Assent right at the end of the final session of this Parliament and on 24 July a number of its provisions of the Act will come into force.
The Secretary of State will have responsibility for deciding when the rest of the Act will be implemented.
As I have already commented it seems likely that the Government will adopt a phased approach, with an initial focus on devising the enabling legislation required for outstanding provisions in the Leasehold and Freehold Reform Act, and potentially early action to introduce some of the more straightforward recommendations (such as removing the two-year rule).
The abolition of leasehold and / or any implementation of the Law Commission’s proposals would require a big piece of all-encompassing legislation, which would no doubt take up significant parliamentary time. If this is on the new Government’s agenda then it may be that these points come to fruition after the first two to three years of their administration.
Looking ahead, there is unfinished work on building safety, renters reform and leasehold reform to consider, not to mention the Government’s plans to build hundreds of thousands of new homes a year and the impact this could have on wider supply and demand issues in the property sector.
The state opening of Parliament takes place on 17 July and I expect that the King’s Speech will provide some early clues as to the Government’s immediate and longer-term priorities on leasehold reform and the housing sector more widely.
12th July 2024
