The government has today published the Commonhold and Leasehold Reform Bill in draft, for pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee.
The draft Bill includes the following measures:
- Reinvigorating commonhold through a comprehensive new legal framework
- Banning the use of leasehold for new flats, ensuring that commonhold is the default tenure in future
- Making it easier for leaseholders to convert their homes to commonhold
- Abolishing the existing forfeiture regime and replacing it with a fairer, more proportionate lease-enforcement regime
- Repealing similar unfair enforcement powers that apply to estate rentcharges on privately managed freehold estates
- Capping ground rents at £250 a year, before changing to a peppercorn after 40 years.
The Bill will reinvigorate commonhold through the introduction of a comprehensive new legal framework based on the vast majority of the recommendations made by the Law Commission in its 2020 report. It will enable commonhold to be used in the widest possible range of settings, enhancing the rights and protections of consumers while also supporting the needs of developers and lenders. The draft Bill also includes measures to make it easier for leaseholders to convert to commonhold, should they wish to do so.
In addition, the draft Bill contains provisions to ban the use of leasehold for new flats. Once this comes into force, it will ensure that, other than in exceptional circumstances, all flats are provided as commonhold. Alongside this, the Government has published a consultation titled ‘Moving to Commonhold’, which seeks input from industry and consumers on how the new ban should be implemented.
In relation to forfeiture, existing laws have allowed landlords to threaten people with the loss of their home and hard-earned equity. The draft Bill contains provisions to abolish the existing forfeiture regime and a new fairer, court-led process with strict safeguards for more extreme cases will be introduced instead. And for homeowners on freehold estates, the Bill will also repeal similar enforcement powers that apply to estate rentcharges.
The Government’s manifesto committed to tackling unregulated and unaffordable ground rent charges, and the draft Bill contains proposals to cap existing ground rents at £250 per year, which will change to a peppercorn after 40 years.
The statement can be read HERE.
Andrew Bulmer, Chief Executive of The Property Institute, commented:
“We welcome the publication of the Draft Commonhold and Leasehold Reform Bill, which will give homeowners more control of the estates and communities they live in and reduce high and escalating ground rent costs for many leaseholders. These are important steps forward in improving the lives of homeowners in England and Wales.
“Commonhold will bring new responsibilities for homeowners, including building safety, financial governance, and upkeep of shared areas. Our members regularly work with residents who manage their own buildings – two thirds of the buildings TPI members manage are resident-controlled. We embrace the move to commonhold and stand ready to support future generations of commonholders to live in safe, well-managed homes.
“It is vital that commonholders, as well as leaseholders, can rely on a professional and regulated property management sector to support them. We want to see Government also deliver on its commitment to mandatory qualifications, and to bring forth regulation of managing agents, to further improve outcomes for homeowners.
“Some of these reforms will be complex, and there will be important details to scrutinise, for example, on a replacement for forfeiture, to ensure buildings with arrears can continue to function. It is very positive that the Select Committee will first scrutinise a draft of the Bill with all stakeholders.
“For our members, these reforms will bring change as the sector adapts to commonhold, although most of our members already work directly for residents – more than half of the buildings they managed are resident owned-or controlled. The Property Institute is already developing guidance and qualification modules to support our members and will continue to engage with Government to ensure the new measure in the Bill are proportionate and practicable.”
