In January 2022, the Government opened a consultation entitled “Reforming the leasehold and commonhold systems in England and Wales”. This sought views on particular recommendations made by the Law Commission back in July 2020, which included a proposal in relation to mixed use buildings to raise the qualifying threshold percentage of non-residential parts for a building to fall outside of the scope of both the collective enfranchisement and right to manage legislation, from 25% to 50%, in order to broaden the scope of buildings which would then be subject to both enfranchisement and right to manage legislation. For more information on that consultation, see our Insight: The changing leasehold landscape: Government consultation on reforming the leasehold and commonhold systems in England and Wales.
A year on from that consultation, there has been no clear statement from the Government on their timeline for leasehold and commonhold reform or the Government’s formal response to the Law Commission’s detailed proposals.
The Leasehold Reform (Ground Rent) Act 2022 came into force with effect from 30 June 2022, which the Government has called “phase one” of its leasehold reform programme. This abolished ground rents in the majority of new residential long leases of a single house or flat. These provisions will apply to retirement properties from 1 April 2023. For more details, see our Insight: The Leasehold Reform (Ground Rent) Act 2022: Landlords and developers beware serious sanctions for non-compliance.
It is hardly surprising that there have not been a large number of developments since the Law Commission’s reports on commonhold, enfranchisement and right to manage in July 2020 as those reports exceeded 2,000 pages and made 324 recommendations as to reform. This will be a huge legislative exercise for the Government who when the reports were first published were heavily involved in dealing with the pandemic.
The most recent development is a debate on leasehold and freehold reform which took place on Monday 9 January 2023, in the House of Commons. It is clear from this debate that the Government is looking to build on the Leasehold Reform (Ground Rent) Act 2022 to deliver the second phase of the leasehold reform programme. The Government intends to push forward with reforms in the freehold arena so that freeholders will have similar rights to leaseholders to challenge the reasonableness of estate management fees and apply to appoint a Manager. However, those reforms are not new, having been first proposed in a Government consultation response in June 2019.
The main takeaway from those debates for those involved in the residential sector is that leasehold and commonhold reform remains on the Government's agenda and developments can be expected within this Parliament.
We are tracking developments on our Essential Residential Hub and our timeline: Changing landscapes in residential leasehold.
Please do not hesitate to contact Natalie Deuchar, Laura Bushaway or your usual Charles Russell Speechlys contact if you have any queries.
The Government are committed to building on the Leasehold Reform (Ground Rent) Act 2022 and delivering the second phase of our major two-part leasehold reform programme within this Parliament.