The King’s Speech: Property and Housing Update

August 6, 2024

The King’s Speech: Property and Housing Update

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By Siôn Fôn

Following the King’s speech, which recently set out the new UK Government’s objectives, our property experts look at the proposed rule changes to property and housing law.

Whilst the Government is unlikely to unveil its detailed plans until at least September, the King’s Speech has provided property owners and leaseholders with a guideline of the changes they can expect to see.

1. Strengthening Leaseholders’ Rights

The Government has pledged to abolish leasehold tenure, ensuring that commonhold would be the default tenure for apartment blocks and new-build flats going. They wish to bolster leaseholders’ rights and tackle unregulated and unaffordable ground rents.

When buying a leasehold property, you become the owner of the property, but not of the freehold land that your property is built, this can lead to some controversial situations which people will not be familiar with when they purchase.

2. Collective Enfranchisement

There has already been significant reform of this area with the introduction of The Leasehold and Freehold Reform Act 2024. However, this Act required further secondary legislation to become active and the new Government will need to set out dates to put the law into effect. We do not expect the most important changes in the act to become live until at least 2025/2026.

The intended changes include:

• Changing the valuation formula for purchasing a freehold – this should make the process much quicker and cheaper for tenants. This includes removing “marriage value” which can significantly increase premiums for some leases.
• Removing the requirement for 2-year ownership for qualifying tenants.
• Allowing more mixed-use buildings to qualify for enfranchisement or the Right to Manage -meaning those with less than 50% of the building in commercial use will now qualify (from 25%)
• Reduce barriers for tenants who want to take over management of their building and allow them to choose alternative managing agents.

3. Abolishing ‘No Fault’ Evictions

There are plans to abolish ‘no fault’ evictions (Section 21) in England, which means that landlords will be unable to evict a tenant without providing a valid reason. There are also plans for regulations to ensure safer homes and set up a new ombudsman.

This Act will not apply to those in Wales, as Section 21 has already been replaced here and no-fault evictions require the landlord to give at least 6 months’ notice to their tenants, which can only be issued after an initial 6-month period, thus ensuring that tenants have at least a year to live in their new home.

4. Stamp Duty / LTT

In England, the current nil rate band for stamp duty Land Tax set for first-time buyers is £425,000. The Government has stated that they plan to reduce this number to £300,000 by April 2025.

In Wales, where the tax is devolved and stamp duty was replaced with the Land Transaction Tax in 2018 – there is no specific first-time buyer’s relief. However, you do not have to pay any tax when buying a house worth up to £225,000 in Wales.

5. New Homes

The new Government plans to build over 1.5 million new homes in the UK over the next five years. They stated that they will achieve this by updating the National Planning Policy Framework, including restoring mandatory housebuilding targets for local authorities. This means that building will be allowed on some land which is currently designated as green belt.

What this means for Wales

Many of the new bills to be introduced won’t affect Wales, as housing has been devolved to the Senedd. The King’s Speech did however contain a pledge that the UK government wishes to bring the devolved institutions closer together and that they plan to strengthen their work with the Governments of Wales, Scotland and Northern Ireland.

It will be interesting to see how the new laws will be drafted, given that the English and Welsh housing law system and rules have grown apart over the last 10 years.

If you would like more tailored advice on property or housing issues from one of our experts, please contact Siôn Fôn via email on sfon@darwingray.com or via telephone at 02920 829 107 for a free initial chat to see how we can assist you.