The King’s Speech: implications for the property industry

In the much-awaited King’s Speech on 7 November 2023, King Charles III set out the Government’s priorities for the coming parliamentary session. The speech proposed various items of legislation, including the Leasehold and Freehold Bill and Renters (Reform) Bill. If introduced, these would directly affect the property industry.

The Leasehold and Freehold Bill proposed in the King’s Speech seeks to establish ‘fairness’ in certain sectors of the UK housing market through further leasehold reforms. Its introduction would build on the work of the Leasehold Reform (Ground Rents Act) 2022, which saw the discontinuation of ground rents for new, qualifying long residential leasehold properties in England and Wales.

Proposed changes to the Leasehold Reforms in the new Leasehold and Freehold Bill include:

  • Making it cheaper and easier for existing leaseholders in multi-occupancy buildings to extend their lease or buy their freehold, including removing the requirement for a new leaseholder to have owned their flat (or house) for two years before they can seek a leasehold extension or enfranchise

  • Increasing the standard lease extension term from 90 years to 990 years for both houses and flats, with ground rent reduced to £0

  • Increasing the 25% ‘non-residential’ limit in mixed-use property to 50%, enabling more leaseholders to buy their freehold or take over the management of their buildings

  • Requiring transparency on service charges, in a comparable format, and that these can be challenged

  • Replacing residential buildings insurance commission for managing agents, landlords and freeholders with administration fees, to provide transparency on these costs to leaseholders

  • Extending 'redress' schemes to freeholders to enable leaseholders to challenge poor practice

  • Removing the presumption that leaseholders must pay their freeholders’ legal costs when challenging poor service

  • Building on legislation under the Building Safety Act 2022, ensuring freeholders and developers are unable to escape their liabilities to fund building remediation work

  • Banning the creation of new leasehold houses – other than in exceptional circumstances

  • A consultation on capping existing ground rents

Proposed further Renters (Reform) Bill amendments

Alongside the proposed Leasehold and Freehold Bill, the King’s Speech included proposals for a new Renters (Reform) Bill. The Bill seeks to provide renters with stronger security of tenure and better value, while also giving landlords greater powers to regain their properties when required.

Proposed changes in the Renters (Reform) Bill include:

  • Abolishing 'no-fault evictions' under Section 21, but only once stronger possession grounds and a new court process are in place

  • Strengthening landlord grounds for possession, including reasons such as where the landlord wants to sell the property or repeated rent arrears

  • Introducing stronger powers to evict anti-social tenants halving the delay between serving notice and eviction for these tenants

  • Ending blanket bans on pets in rented accommodation, allowing tenants to request a pet while protecting landlords by allowing them to insist on damage insurance against damage by pets

  • Creating a new digital Private Rented Property Portal to provide key information for landlords, tenants, and councils

  • Supporting quicker, cheaper resolutions to disputes with a new Private Rented Sector Ombudsman

Additionally, it was announced that the Government intends to bring forwards amendments at the earliest opportunity to:

  • Abolish blanket bans on renting to tenants on receipt of benefits or with children

  • Facilitate enforcement action against criminal landlords

  • Introduce a new ground for possession within the student rental market (PBSA is already exempt)

Alongside the Bill, the Government is pursuing wider measures to support landlords, including:

  • Speeding up the courts process, helping landlords to regain possession of their property where a tenant refuses to move out

  • Scrapping proposals to require landlords to meet EPC C standards from 2025 in their private rented properties

Updates to the commission process

The proposal within the King’s Speech to prohibit buildings insurance commissions being paid to landlords, freeholders and managing agents for the insurance administration work they carry out, and introducing an alternative mechanism of compensation (fees) for their services, is likely to have significant consequences for landlords, freeholders, and managing agents.

More information about the commissions process, including background and context to the proposals set out within the King’s Speech, can be found here (opens a new window). The full text of the King’s Speech, including all proposals relating to the Leasehold and Freehold Bill and Renters (Reform) Bill, is available here (opens a new window).

For further information, please visit our Lockton Global Real Estate & Construction (opens a new window) page, or contact your usual Lockton service team.