Changes to Property Law are afoot: Will they impact you?

The government is introducing changes to property law, and some of these changes will impact leaseholders of Winnals Park, albeit not immediately, and not in a way that will have a major impact.

In January, government announced the plans to make big changes to the property law, and to reform leasehold. Leasehold reform, which started last century, is a long term project supported by all parties to strengthen the property rights of leaseholders, while at the same time restricting rights and privileges of freehold owners, and to make steps to align the property law of UK with that of other parts of the English speaking world.

One change is creation, this year, of Commonhold Council(1), further expanding law related to commonhold (2), which is a form of legal property ownership created by Commonhold and Leasehold Reform Act 2002. Commonhold gives leaseholders more autonomy over properties in which they live. Leaseholders (or really commonhold homeowners) control the decisions related to their common areas of their homes including grounds, via “Commonhold Associations”. In a way, the way Winnals Park freehold has been structured, is not unlike common hold association, but using the legal framework existing in 1950-ties. One of the major differences is that commonhold does not have a pre - determined term (“length of lease)” and a title is held in perpetuity.

Leasehold Reform (Ground Rent) Bill had its first reading on 12th of May this year (2021) in House of Lords (3). It will create and clarify the rules for valuation of freehold, and for valuation of lease extensions, thus preventing the need for long and convoluted negotiations between freeholder and leaseholder, especially when these negotiations are sometimes taking place within the relationship that is often adversarial and sometimes downright hostile. It will also standardise the rent payable to freeholder by leaseholders under the lease.

One of the future areas of regulatory reform is proposed licensing and regulation of Property Agents, including Management Companies (4). Although some recent law changes, like Client Money Protection Requirements Regulations 2019, went in the right direction, they did little to improve the profound lack of trust that public have in property professionals. Apart from introducing qualification standards, the reform proposes mandatory code of practice. Current code of practice for managing agents: Service Charge Residential Management Code (3rd edition)(5) is obligatory for Managing Agents who are members of professional bodies [like our Managing Agent, Hunters, who is member of ARMA(6)]. Unfortunately, as it currently stands, many freeholders, and property agents, are free to ignore code of practice and codes of conduct that guide their professional colleagues.