It has been less than two months since the Leasehold and Freehold Reform Act 2024 came to a dramatic conclusion, following the announcement of the snap election on 22 May 2024. Many articles and webinars have flowed since then, with differing levels of opinion not only on the content, but on what happens next.
So what does happen next? Simply put – no one knows nor can anyone predict with any certainty what happens next!
New primary legislation
For reform enthusiasts, the election gave us no respite from leasehold reform chatter. The Conservatives committed to a capping of ground rents, changes to forfeiture and making commonhold more accessible. Labour committed to mandatory commonhold for new supply, and implementation of the full suite of Law Commission recommendations for enfranchisement and right to manage. The Liberal Democrats pledged to abolish leasehold and cap ground rents.
Leasehold has therefore been thrust into the political limelight once again, the content of which has already been subject to much discussion during the Parliamentary passage of the LFRA 2024.
Now that the election is over, and with strong commitments from Labour to progress further leasehold reform, it leaves us with even more questions, not just about the prospect of a second leasehold bill, but what this might mean for LFRA 2024 – will they overlap, or will LFRA 2024 forever remain dormant with the new bill overriding the LFRA 2024? Will they commence together or will the LFRA 2024 go first? If there is a second bill, will it be a first term bill or will it be a “wait and see” during the next government’s five-year term?
Whilst the industry has openly raised concerns about the uncertainty in the market due to the time being taken to progress the reforms, this General Election has offered little comfort. The King’s Speech is on 17 July 2024, during which the new Labour Government’s legislative agenda for their first term will be confirmed. This may or may not include a second leasehold bill. Given Labour Government’s extensive proposals for leasehold reform, one assumes that a comprehensive bill in the first term would be very difficult. Alternatively, they might just introduce some headline “quick wins” with the rest to follow later on.
On the content, we know the headlines, but as before, until we get a second bill, we do not know what the detail is, nor if any other areas of law will be included.
In respect of a second bill therefore, in theory, the industry will know on 17 July 2024 if a second leasehold bill is to follow in quick succession and if not, at least have a year of relative stability before the second term legislative agenda has been confirmed.
Commencement of LFRA 2024
Insofar as the LFRA 2024 itself is concerned, the industry will, again, likely have to wait. Commencement may be introduced promptly for those parts which are straightforward to commence without further and detailed secondary legislation.
As for the more complex provisions in the Act, there was talk of the need for further consultations during the final days of the debate in the House of Lords, on topics such as valuation.
Having said that, there is limited parliamentary obligation to commence an Act, either in whole or in part, once Royal Assent has been granted, save for a promise to review commencement once every five years.
Secondary legislation entails a far less lengthy or complex procedure than primary legislation, so reform watchers will need to keep an eagle eye out for commencement provisions as and when, or indeed if, the LFRA 2024 commences in earnest.
Amendments to LFRA 2024
Given that no new substantial content can be added to the LFRA 2024, a second bill is not necessarily all bad. The LFRA 2024’s journey saw many amendments proposed, not only limited to substantial new content, such as abolition of forfeiture or regulation of managing agents, but also fixes to the existing content of the LFRA 2024. The speed at which LFRA 2024 was introduced has left inevitable drafting consequences in various places which would be helpful to fix before commencement.
Labour’s manifesto pledged will undoubtedly need primary legislation to implement, which may see amendments made to the LFRA 2024 as part of that process. Alternatively, we may see amendments to LFRA 2024 crop up in another bill, such as in any reinvigorated renters’ reform legislation.
Here we go again!
For the industry, and indeed the leaseholders and landlords to whom all of this materially and personally affects their lives, we enter once again a period of unknowns, at least until the Autumn once the new Labour Government starts to bed in.
No matter what individual views are, either on the reforms themselves or about politics generally, it will no doubt be an interesting couple of months for the industry. The new Labour Government will no doubt have a lot to consider in the early days of the first term, especially if a second leasehold bill is planned.
The Team at Commonhold and Leasehold Experts Limited
