Leasehold and Freehold Reform Bill
In the final hours of the outgoing parliament the Leasehold and Freehold Reform Bill 2024 was passed. Parts of this bill apply to us, so I wanted to explain my understanding of what it means. Disclaimer: I am not a lawyer, so there may be wrinkles in this I have missed.
The most important news, sadly, is the change that didn't happen. Estate rentcharges (like ours) have not been reformed. See below for details.
The National Archives has a web site with all current law with all the amendments applied. This bill hasn't made it through that process yet, but as far as I can tell the version that was passed was the latest version of the full bill (as amended in committee).
The first four parts of the bill are concerned with the rights of leaseholders, which don't concern us, but parts five, six and seven are about estate management and rentcharges.
Part 5: Estate Management
This section regulates the kind of estate management scheme that applies to us. For the most part it won't make much difference because the Transfer Documents for our houses already include language with a similar effect, but the following points are notable:
Disputes with the estate manager are now the domain of the "First-Tier Tribunal", the same tribunal that deals with leasehold disputes (Section 98).
We now have a statutory right to be consulted over works where the value exceeds an "appropriate amount" set by the Secretary of State. (Section 74).
We will have a statutory right to "request" (i.e. demand) certain information from the estate manager. Exactly what kinds of information will be set by the Secretary of State. (Section 79)
Administration charges are going to be regulated, including application charges for things like extensions (Section 82).
Codes of practice that previously applied only to leasehold and rental property management will apply to us as well. (Section 87)
When you are selling your house you can "request" (i.e. demand) relevant information from the estate manager. Again, the Secretary of State will decide exactly what that information is. (Sections 93 & 94).
Part 6: Redress Schemes
This says that the Secretary of State can set up a "redress scheme" for property management disputes. If I understand it correctly, that would be an ombudsman that you can take a complaint to, rather than having to go to a tribunal. We'll have to see what happens in the future.
Part 7: Rentcharges
One of the more invidious aspects of rentcharge law is the draconian options available for enforcement. Under the Law of Property 1925 the "rentcharge owner" (in our case, Holdings & Management (Solitaire) Ltd or their agents) can repossess your house if you fail to pay the rentcharge on time, even if they hadn't demanded it, or even if you are only a few pounds behind. This has also created problems when getting mortgages: mortgage companies are very leery of lending against a property where someone else might be able to repossess it without warning.
Part 7 of the reform bill amends the 1925 law to create "regulated" rentcharges, but those don't apply to us. The new act says:
For the purposes of sections 120B to 122 a rentcharge is “regulated” if it is of a kind that could not be created in accordance with section 2 of the Rentcharges Act 1977.
Section 2 of the Rentcharges Act 1977 limited new rentcharges to a few categories. One of those is "estate rentcharges", which is what we have. So our rentcharge is not a "regulated rentcharge" and all the reforms don't apply to us.
When I first saw this I thought it must be a mistake, but it seems not. This Research Briefing from the House of Commons describes what happened when the bill was in Committee. The Labour party tabled an amendment which would have abolished the right of reposession altogether, but it was voted down by the Conservative committee members. See this document, Clause 59 for the sad details.
You might want to bear this in mind when you exercise your vote on July 4th.
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