On Monday morning, at the end of our Annual Service Charge Update webinar, I briefly spoke about potential future changes in the context of service charges and particular leasehold tenure. Following yesterday's King's Speech, my crystal ball gazing (admittedly well informed by the Labour manifesto) proved correct.

One of the many Bills announced was the draft Leasehold and Commonhold Reform Bill. The Government's intentions as set out in the background briefing notes to the speech are:

• To introduce the provisions of the Leasehold and Freehold Reform Act 2024 which was passed just before the dissolution of Parliament. 
  • This Act makes changes to service charges and estate rent charges and makes the process of lease extensions easier and cheaper for leaseholders (look out for a series of webinars we will be announcing shortly). The timescales for doing this are not yet clear and as I covered on Monday will require the introduction of various regulations for us to know the nitty-gritty details.
     
• To go further with the new Leasehold and Commonhold Reform Bill to fully implement Law Commission recommendations and:
  • make enfranchisement and right to manage easier and cheaper, giving greater control to leaseholders;
  • limit ground rents; and
  • most fundamentally, seek to end the sale of flats on a leasehold basis and reinvigorate commonhold tenure.

It is the commonhold point which would see a real shift in property scheme set up and transactions as we know them. 

As the briefing notes recognise, commonhold has never really taken off since the Commonhold and Leasehold Reform Act 2002 so there will need to be real engagement with all those in the property sector (developers, lenders, landlords, investors and residents) to understand what the barriers have been to making this work previously and transparent discussions and collaborative working to ensure there is ‘take-off’ this time.

For more information, please contact me.