Leasehold changes

The King's Speech is a speech written by the government and delivered by the Monarch at the State Opening of Parliament. It marks the beginning of a new parliamentary year, or session, and is an opportunity for the government to set out its legislative agenda for the coming months.

The government has stated its intention to 'liberate leaseholders from the unfair and outdated leasehold system'. Accordingly, of particular note in the recent King's Speech is the intention by the government to make further reform to leasehold ownership. The government has announced the Leasehold and Freehold Bill – which will:

• Make it cheaper and easier for people to extend their lease or buy their freehold.
• Increase lease extension terms to give people more security and peace of mind.
• Give greater transparency over service charges and insurance commissions.
• Make it easier for people to manage their building themselves.

The Bill will be introduced to Parliament 'shortly' and here is the problem: there is no guarantee that the proposed changes will ever make it onto the statute book. Whilst many will be pleased that the issue in on the agenda, possible changes may make it more difficult for people to sell their leasehold flats now. Why would a buyer want to purchase a flat now under the current rules if there is a chance that the rules might make the property more marketable and valuable next year? Many buyers will adopt a 'wait and see' approach.

Many leaseholders have felt trapped in recent months due to the uncertainty caused by the Building Safety Act 2022 relating to the issue of remediation of defective cladding. Whilst a laudable aim, the Act is complex and many conveyancing firms are not willing to handle affected leasehold transactions for the time being.

Any further uncertainty relating to the leasehold market and the proposed new reforms will therefore not be welcome. Buying a property is the biggest investment that most people make and it has never been more important for sellers and buyers to take advice from a specialist property firm so that they can understand the current legal position. No one has a crystal ball, but early advice could save time and money in the long run.

To discuss this or any other property matter, contact us.