The King’s Speech: implications for residential property

The King’s Speech 2024, delivered on 17 July 2024, outlined the new UK Government’s legislative agenda for the next session of Parliament. The new MPs will be busy, with close to 40 separate bills slated for debate.

With regard to real estate, especially with the private rented sector, there is a distinct feeling of déjà vu. The Renters (Reform) Bill, sponsored by Michael Gove, is re-fashioned as the Renters Rights Bill, and is likely to contain all of the measures set out in its predecessor, before the Conservative back benches forced a dilution of the pro-tenant measures.

Renters Rights Bill

The Renters Rights Bill (the “Bill”) aims to give greater rights and protections to tenants in the private rented sector. The Bill will abolish section 21 of The Housing Act 1988 so-called “no fault” evictions, and introduce new, wider grounds for possession so landlords can evict problem tenants. Mr Gove was forced to abandon the no-fault eviction measure because of the perceived inability of the county courts to deal with any increased case load. Housing minister, Matthew Pennycook, is unlikely to face any opposition from his own side, and as such it is likely to become law perhaps as soon as the end of the year with transitional provisions for existing tenancies.

Other pro-tenant measures include the right for tenants to request that they be allowed to have a companion animal living with them, with the landlord not able unreasonably to refuse, tenants will be given the right to challenge ‘bad-faith’ rent increases where the landlord’s aim is to force tenants from their homes and there is a commitment to end so called “bidding wars”.  How this will work in practice is unclear. 

The Decent Homes Standard, which has long applied in the social rented sector setting out a minimum standard for the condition of homes, will be extended to the private rental sector, although again, it remains to be seen whether local authorities will have the resources to undertake the new, stronger enforcement measures against unscrupulous landlords.

Other measures in the proposed Bill have been copied over from the Renters (Reform) Bill and include a commitment to create a digital private rented sector database that brings together key information for landlords, tenants and councils, and a new ombudsman to provide a quicker and cheaper resolution of disputes for tenants. 

In addition, the Bill promises to prevent landlords discriminating against potential tenants with children or those that are in receipt of benefits. Again, it is unclear how this will be enforced.  Whilst landlords will no longer be able to advertise overtly their reluctance to take such tenants, proving discrimination will be extremely challenging in an already overheated rental market, at least in some parts of the country.

Draft Leasehold and Commonhold Reform Bill

Could this finally be the death knell for leasehold tenure in the residential sector?  The draft Leasehold and Commonhold Reform Bill is set to bring leasehold to an end and give commonhold a refresh by enacting the Law Commission’s outstanding recommendations to further strengthen leaseholders’ rights.  The Bill will:

• restrict the sale of new leasehold flats;
• regulate existing ground rents; and
• end forfeiture for residential leaseholders.

It should be remembered however that the death of residential leasehold has long been forecast and it may be that the UK Government will find that the same challenges and entrenched interests will ensure its survival.

Leasehold and Freehold Reform Act 2024

The UK Government has confirmed its intention to implement the measures in the Leasehold and Freehold Reform Act 2024 (the “Act”) that are not yet in force. The Act, which received royal assent in May 2024, includes such reforms as banning new leasehold houses and amending the law relating to leasehold enfranchisement and lease extensions.

Conclusion

With the parliamentary majority that the UK Government enjoys, its legislation is likely to benefit from an easier passage through the Commons. In a sense, at least as far as residential property is concerned, the new administration is not proposing anything new, but instead continuing with the major reforms initiated by its predecessors.