(Minister of State for
Housing): During the Leasehold and Commonhold
Reform Westminster Hall Debate on 2 October, I pledged to setting
out in full the actions the government is taking on leasehold and
commonhold reform (Column 366WH).
The government is taking forward a comprehensive reform of
leasehold and commonhold, so it is fairer for homeowners. We
responded on 27 June 2019 to the technical consultation on
leasehold reform which set out how our plans will work in
practice. We will legislate to ensure that, in future, apart from
in exceptional circumstances, all new houses will be sold on a
freehold basis. We will also reduce ground rent to zero on new
leases and will improve how leasehold properties are bought and
sold by setting fixed time frames and maximum fees for the
provision of leasehold information. We will implement these
changes when Parliamentary time allows.
We are also working with the Law Commission to:
- standardise the enfranchisement process, so that buying a
freehold or extending a lease can be made easier, quicker and
more cost effective.
- review how Commonhold works, so that it is a viable
alternative to leasehold for both existing and new homes.
- make it easier for leaseholders to obtain the Right to
Manage, in both straightforward and complex developments.
The Law Commission will report back to government on options to
reform the valuation process this autumn, and on all three
projects in February 2020.
In March 2019, we launched an industry pledge which commits
freeholders to identifying any lease with ground rent terms that
double more frequently than every 20 years and contacting
leaseholders to offer to amend the terms. The pledge has been
signed by more than 60 leading developers, freeholders and
managing agents. We will continue to monitor its effectiveness
and take further action as necessary.
The Competition and Markets Authority (CMA) announced in June
2019 that it will carry out an investigation into the mis-selling
of leasehold properties. The CMA will use its consumer protection
powers to determine whether leasehold terms – including onerous
ground rents and permission fees – can be classified as ‘unfair’.
If the evidence merits it, the CMA will consider whether to bring
forward enforcement proceedings. We look forward to receiving the
outcome of this work.
We have also:
- made it easier for leaseholders to form Recognised Tenants’
Associations (RTAs). We will shortly be reviewing this
legislation to see how effectively it is working in practice.
- worked with Trading Standards to improve information on
accessing redress through the publishing of new guidance, which
will help current leaseholders understand the redress process
better.
- committed to implement most of the Law Commission
recommendations in its 2017 Event Fees in Retirement
Properties report. We will consider two
recommendations (on succession rights and a database of leasehold
retirement properties with event fees) further to determine the
most effective way of improving the system for consumers.
- asked the Law Commission to update its 2006
report, Termination of Tenancies for Tenant
default, so that we can consider next steps on the law of
forfeiture.
- committed to introducing legislation to extend mandatory
membership of a redress scheme to all freeholders of leasehold
properties.
- set out our intention to give freehold homeowners the same
rights as leaseholders to challenge the reasonableness of estate
maintenance fees, and to apply to the tribunal to appoint a new
manager.
- committed to ensuring homeowners cannot be subject to a
mandatory possession order for minor ground rent or rentcharge
arrears.
- announced in March 2019 that we will address the issue of
legal costs. We believe leaseholders should not be subject to
unjustified legal costs and will close the legal loopholes that
allow this to happen.
We have also committed to regulating managing agents and to
improving the transparency and fairness of service charges. This
includes introducing a single mandatory and legally enforceable
code of practice to set standards across the sector and requiring
agents to be qualified to practice.
Last October, we established an independent working group,
chaired by , to take this work forward.
They looked at how standards can be raised across the property
sector and how fees such as service charges should be presented
to consumers. The working group published its final report to the
government in July 2019, and we are considering its
recommendations and will announce the next steps in due course.
