The first King’s Speech has met with a lukewarm response from the built environment industry, with some praising the government’s commitment to leasehold reform and the abolition of Section 21 ‘no-fault’ evictions, while others slammed it as “a missed opportunity” and criticised the lack of detail.
During his speech on Tuesday morning, King Charles said that the government would reform the housing market by making it “cheaper and easier for leaseholders to purchase their freehold” and tackling the “exploitation of millions of homeowners through punitive service charges”.
The King added that under the proposed new renters reform bill, renters would benefit from “stronger security of tenure and better value, while landlords will benefit from reforms to provide certainty that they can regain their properties when needed”.
The proposals, which can be read in full here, received a mixed reaction from members of the built environment industry.
Ian Fletcher, director at the British Property Federation, said: “This is a bill of missed opportunity and stored up problems. It wants to improve the experience of leaseholders yet says nothing about their main day-to-day interaction with managing agents, who are unregulated. It wants to scrap ground rents, yet says nothing about the disruption that will cause to everyday management, and building remediation efforts, as freeholders’ businesses become unviable.
“Silence kicks commonhold into the long-grass, perhaps for ever. And by raising the enfranchisement threshold on mixed-use property, it damages the mixed-use property investment market, as more landlords lose their development rights, and control of their property’s management, hurting levelling-up in the process. Though they may not know it, the bill will wipe billions of pounds off the savings of not just investors, but charities, pensioners, and local authorities.
“The bill has some useful reform. Fairly apportioning legal costs, banning the sale of most leasehold houses, tightening up on insurance commissions, and extending redress are all sensible measures. Overall, however, it is a patchwork, and some way from the comprehensive reform suggested by the Law Commission.”
A spokesperson for RICS said: “RICS is glad that the government has committed to abolishing Section 21 ‘no-fault’ evictions. We agree that the court system must be reformed and digitalised, however the lack of timescale for it will be of little comfort to renters, who are also facing increasing rents and decreasing choices of homes whilst we continue to under-deliver on new housing supply.”
They added: “RICS is pleased that legislation will be introduced to make it cheaper and easier for leaseholders to purchase their leasehold property and tackle unfair service charges. This should provide greater protections and certainties for both tenants and landlords. Also, the new ombudsman offers tenants greater protection and support in challenging unfair practices by landlords.”
Caroline Wild, senior associate at Forsters, said: “The existing law allows leaseholders of residential properties to purchase the freehold and extend the leases of their houses or flats, but these rights have been developed piecemeal and are the product of over 50 acts of Parliament, totalling more than 450 pages of legislation. This is why the system can appear inconsistent, unnecessarily complex and inherently unfair for leaseholders, often leading to protracted and expensive legal proceedings.
“The subject of leasehold reform is emotive and there are many factors and viewpoints to consider. The government cannot afford to be too ambitious or they will never get the bill through in time. Some of the proposed changes will be beneficial and will streamline enfranchisement, making it easier to navigate each process. Other proposals will simply raise more questions and will require much more thought and consultation.”
Lauren Fraser, senior associate at Charles Russell Speechlys, said: “Given the focus on reforms to leasehold in the lead up to the King’s Speech, the lack of detail we have seen today regarding the plans is surprising. This comes in the wake of recent proposals to ban leasehold houses which are not new at all, these commitments were announced four years ago by the government, now simply being repackaged as new plans.
“These proposals are based on an underlying presumption that a radical overhaul of the system is required, which is an oversimplification of a very complex issue. A proper analysis of the criticisms of the existing leasehold system should first be undertaken and if it is found that changes are required further regulation of the leasehold system could be implemented.
“Having said this, leasehold is already one of the most highly regulated areas of the law with many and varied protections for leaseholders and there are plans afoot to give similar protections to freehold owners in relation to estate management charges. This begs the question as to whether Commonhold provides a solution to the perceived problems.
Armel Elaudais, partner at law firm Fladgate, said: “The King’s Speech confirmed that the renters reform bill remains on the agenda after the government recently came under criticism for the delay in implementing the reforms. But given the recognition that the long-awaited ban on section 21 no-fault evictions cannot happen until the Court system has been improved, it remains to be seen how much of the Bill will become law in this parliamentary session and what will be continue to be kicked off into the long grass.”
Rob Poole, director at Glide, said: “Leasehold reform should be widely welcomed – specifically because the intention is to reform rather than replace leasehold. There has been a lot of noise around replacing leasehold with commonhold but this is unworkable on many levels. With commonhold for large blocks such as those that we manage, dispute resolution is so much more complicated because of the numbers involved, that many disputes may never be revolved. This would be compounded by the lack of a first tier tribunal.
“The government has already done a lot to make things fairer for leaseholders, such as changes to ground rents and the work with insurance commissions. This new bill provides an opportunity to build on that.
“Similarly estate charges should come into focus more as some cases have seen rises in over 140% over the last four years. Homeowners have no mechanism to challenge estate charges in the way that leaseholders can challenge service charges at a Leasehold Valuation Tribunal. This runs the risk that estate charges could push homeowners into poverty in future years.
“The proposed lease extension is also welcome, because short leases delay sales, cause chains to break down and consequently contribute to the housing crisis. While I welcome improvement, I’m conscious that change does not necessary constitute improvement – it is vital that the government considers all potential changes very carefully and consults widely.”
The King’s Speech was also criticised by some members of the industry for the lack of focus on housing and planning and significant environmental issues such as nutrient neutrality.
Nick Fell, head of residential at Rapleys, said: “A lot has been said about housing in recent weeks but despite this it feels like there is still a lack of crucial focus on the practical delivery of much needed housing in all major political speeches other than very high targets. This year we have had an affordability crisis, there are record levels of people in temporary or substandard accommodation and homelessness numbers are rising. Yet at the same time the Department of Levelling Up has returned £1.9bn to the Treasury unspent, we seem to be relying on private investors for delivering affordable housing, and developers who are struggling with viability and construction costs are being lambasted for taking too long to bring sites forwards.
“What we need is a robust and practical plan, with private sector input, that will tackle the varying challenges associated with housing provision. One that allows the private and public sector to work together, that fast-tracks the right approach to development, that brings back into circulation the swathes of empty properties that are in disrepair, and that supports, incentivises and rewards developers and housing associations to deliver.
Jason Lowes, partner in planning at Rapleys, added: “We have been waiting for the NPPF for a long time and there is still no sign of it despite it being referenced as ‘to follow’ in the Levelling Up Bill which was fast-tracked last week. However, much in the bill requires both the NPPF and the secondary legislation and guidance which we need to see in order to understand practicalities so it doesn’t feel like we are very far further forwards. We hope that both of these will not be further delayed by party politics.
“As an industry, we need to avoid any other confusion or delays to much needed development and there have been numerous consultations over the last 18 months across various policies already. One thing is for certain, local authorities will need to have more resource and guidance to wade through the new responsibilities coming their way from design codes to fines, build out rates to greenbelt and everything in between.”
Lawrence Turner, director of Boyer, said: “As the single most significant block on housing development, the issue of nutrient neutrality is the main contributor to the housing crisis. At least 150,000 homes have been delayed because of the of the government’s failure to address the issue – and of these at least 45,000 are much-needed social/affordable housing units.
“Only last month, Michael Gove told the Conservative Party that he wanted the rules to be scrapped ‘at the first available opportunity’ and so it is extremely disappointing that this opportunity has now been lost. The continued uncertainty will continue to the detriment of those most in need.”
