Not enough housing, too-little-too-late leasehold reform and renters reform – the first King’s Speech from King Charles and Rishi Sunak has left the UK industry underwhelmed
In what will most likely be the final King’s Speech before a general election in the next year, King Charles delivered his first formal reading of the Government’s latest legislation plans.
These include stricter law and order policies, as well as new gas and oil licenses to ensure UK energy security despite environmental concerns about continuing reliance on fossil fuel industries, both domestic and abroad.
For UK construction, the key focus will be the announcements relating to housing- affordable housing has been a concern in the UK for several years.
Fuel to the fire was added earlier this week after Home Secretary Suella Braverman described homelessness as ‘a lifestyle choice’, revealing plans to prohibit charities from giving out tents to those sleeping on the streets.
A lack of affordable housing policy was “desperately disappointing”, but unsurprising
Lee Bloomfield, chief executive of Bradford-based Manningham Housing Association, criticised the lack of a firm commitment on affordable housing, saying that housing associations “cannot do this alone; the government must take the lead.”
“The present administration stopped any pretense that building new homes was a priority when it ditched its target of building 300,000 homes every year, essentially casting housing associations and deprived neighbourhoods in places like Bradford and Keighley adrift.
“By doing so, it chose to snatch away opportunities for better lives that people of all ages living there deserve.
“The absence of any renewed commitment in the King’s Speech to build more new affordable homes is desperately disappointing but, in the wake of Suella Braverman’s crass and heartless comments, not in the least bit surprising.”
Leasehold reform in the King’s Speech is too little, too late
Lauren Fraser, senior associate, Charles Russell Speechlys, questioned the prominence of leasehold reforms in the King’s Speech, despite their lack of substance: “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 4 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.
“…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.”
“Disappointing for those already owning a leasehold house”
Legislation will, says John Stephenson, a partner at the law firm BDB Pitmans specialising in residential property and leasehold enfranchisement, principally affect only new build houses with owners of leasehold flats having limited though useful benefits.
“The proposed legislation will prevent residential developers selling houses on a leasehold basis – something most reputable developers have already stopped. The Government’s estimates suggest that just 1% of new houses are sold on a leasehold basis, down from 15% in 2016, and with ground rents capped at a peppercorn on new builds since June last year. It is a classic case of shutting the stable door after the horse has bolted.
“The legislation is disappointing for those already owning a leasehold house. Unless they can afford to buy the freehold and thus extinguish the ground rent – which can be expensive – they may find themselves continuing to pay ground rent.
“That rate will be capped but the legislation is unclear at what rate and the Government may find itself having to compensate the owners of those ground rents.
“Flat owners – who make up 70% of the new homes market – can be forgiven for feeling short-changed. Whilst legislation will make it possible to extend their lease from the 90 years as now to 990 years and without having to wait for two years after purchase, they will see no other changes to their leasehold arrangements and many of the Law Commission’s recommendations, such as the abolition of marriage value, have been shelved, perhaps on Human Rights Act grounds.”
Many landlords will see the requirements of the Renters Reform Bill “as a burden”
Tristan Ward, partner at BDB Pitmans, comments on the Renters Reform Bill:
“Tenants in the private rental sector will welcome the news that the measures in the Renters Reform Bill will be carried over rather than being dropped completely after the Government confirmed that some of the reforms in the bill, such as abolishing no-fault evictions, would be delayed until the justice system becomes “fit for purpose”.
“We think the bill will be passed with few amendments; and it remains to be seen whether and how many private sector landlords will exit the market, with consequent effects on availability of stock and levels of rent in a country chronically short of housing.
“The Bill includes proposals other than abolition of no-fault eviction, including establishment of a Private Rented Sector Ombudsman and of a Privately Rented Property Portal. While the majority of tenants and landlords are able to cooperate sensibly, these new institutions, if implemented, should diminish the capacity of a minority to abuse the renting process.
“However, many landlords will see these requirements as a burden, and will wait to see whether the fees required of them to maintain these services are ‘proportionate and good value’ as the government promises. It remains to be seen whether any of these proposals will be implemented before the next election, or left, along with the abolition of “no-fault eviction” for the next government to deal with.
“We encourage landlords to begin the process of (i) identifying properties they that are below a decent standard and either improve or sell them; (ii) consider whether to retain current tenants who have not acted reasonably in the past; and (iii) exercise even more care in screening prospective tenants.”
Even those in favour of deregulated markets were underwhelmed
Commenting on the King’s Speech, Mark Littlewood, director general of the free market think tank, the Institute of Economic Affairs, observed that projected economic benefits will likely only benefit in the short-term: “The King’s Speech was an opportunity to reset the agenda, yet has proven little more than heavy on intervention, light on liberalisation. While the government promised to ‘make long-term decisions to change this country for the better’, these announcements risk perpetuating Britain’s nit-picky overregulation, high tax, and low growth economic model.
“New trade agreements, including joining CPTPP, will give consumers more choices and provide opportunities for British businesses. Expanding North Sea oil and gas licences is a welcome step towards lower energy costs, but it can only go so far. But without a fundamental shift in economic thinking, we are on the path to another lost decade of economic growth.”
“Simply, we need more homes”
Sean Keyes, managing director, Sutcliffe, concluded: “Everyone in the UK deserves to live in a decent, quality home; there should be nobody living in a mouldy or cold home, and it should be big enough to support the size of the family living in it.
“In reality, this means we need to build more homes, just as the government has promised to do so. Not only is this a significant benefit to the construction sector, but also for UK society in general.
“Simply, we need more homes.”
