A King’s Speech fit for a government running out of time

Posted: November 7, 2023 | Author: julesbirch | Filed under: Energy efficiency, Housebuilding, Leasehold, Private renting, Rough sleeping |Leave a comment

Originally written as a column for Inside Housing.

The good news is that the King’s Speech does promise a Leasehold and Freehold Bill. The less good is that this is not yet the end, and maybe not the beginning of the end either, for the tenure that Michael Gove described as ‘indefensible in the 21^st century’.

As first reported by the Sunday Times last month, leasehold reform will be part of the legislative programme for the next parliamentary session, confounding fears that it would be left in the pending tray until the next election.

But it will still be a race against time to get a complex piece of legislation through parliament in little over a year and its most far-reaching proposal is only a consultation for now.

The other major housing measure in the speech is confirmation that the government will continue with the Renters (Reform) Bill and abolition of Section 21 after introducing them in the last session.

There was no mention in the speech or the background documents of criminalising tents, despite home secretary Suella Braverman’s controversial comments about rough sleeping being a ‘lifestyle choice’.

Something like it could yet appear in the Criminal Justice Bill as the government looks to replace the Vagrancy Act but for the moment it looks as though the leak over the weekend was designed to kill the idea.

More surprisingly, neither the speech nor the background briefing document mention rules on nutrient neutrality that the government claims are blocking 100,000 new homes. An attempt to do this in the Levelling Up Act foundered in the House of Lords but ministers had vowed they would try again as soon as possible.

There is also a glaring contradiction between comments about the importance of energy efficiency in homes in the briefing on the Offshore Petroleum Licensing Bill and boasts about measures to support landlords by scrapping the requirement to bring their properties up to EPC C in the background to the Renters (Reform) Bill.

There is thankfully more clarity about the Leasehold and Freehold Bill. After months of speculation about wrangling with Number 10, the fact that it will appear in the new session at all is a victory for Mr Gove and housing minister Rachel Maclean, but the scope of the legislation still looks significantly narrower than was first promised.

When the government passed legislation last year reducing ground rents on most new build properties to a nominal amount, it was billed as part one of action to address the issue with part two to follow to help existing leaseholders and the wider future of the controversial tenure.

The new Bill seems to fall some way short of that. A complete ban on the sale of new leasehold houses looks like the headline measure at first glance but it only fulfils a promise made by Sajid Javid as long ago as January 2017.

In the wake of the scandal over developers exploiting leasehold and very few new houses are currently being sold as leasehold.

A ban on the sale of leasehold flats was evidently a step too far for Mr Gove or for Number 10, even though the alternative of commonhold has existed for almost 20 years and successive governments have promised to ‘reinvigorate’ it.

A proposed consultation on capping all ground rents at a nominal amount is much more significant for existing leaseholders but it is merely a consultation at this stage, perhaps because the government is only too aware of the dangers of being forced to pay substantial compensation to freeholders.

It’s promising that the background briefing suggests that ‘subject to that consultation, we will look to introduce a cap through this Bill’ but that seems optimistic.

A range of other proposals will make it easier and cheaper to extend leases and introduce a default extension of 990 years. These are in line with Law Commission recommendations to make the system fairer.

There are also measures to improve leaseholders’ consumer rights that did not appear in press reports last month, including making service and estate management charges more transparent and replacing opaque buildings insurance commissions with more transparent administration fees.

The government is also looking to scrap the insidious presumption that leaseholders have to pay freeholders’ legal costs when they challenge poor practice – though it’s not clear how it could change the terms of individual leases.

Victims of the building safety crisis looking for a ray of hope are promised action ‘protecting leaseholders by extending the measures in the Building Safety Act 2022 to ensure it operates as intended’ but it remains to be seen what that actually means.

There should be strong support for the Bill in the Commons given that Labour has promised to make commonhold the default tenure for all new properties. Some Tory backbenchers are also urging the government to ban new leasehold flats.

The background briefing on the Renters (Reform) Bill largely confirms what we already knew from the second reading debate: that the government will scrap Section 21 but only when stronger possession grounds for rent arrears and anti-social behaviour and a new court process are in place.

The latter in particular has an element of if as well as when to it: a report by the Public Accounts Committee in June revealed that a digital case management system had been delayed for 12 months until March 2025 and that work on reforms to the civil possession service had been ‘paused’.

While Labour also backs the abolition of Section 21, ministers could also have to buy off rebel landlords among Tory MPs.

With a year to go before the election, the government had to send a signal to millions of voters who are leaseholders or renters that it is serious about reforms. This is a first step but it has a lot of catching up to do and it is running out of time.      

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