Technical & Complex Litigation team at JB Leitch.
The team at specialist property solicitors JB Leitch reflect on 2024 and indicate key points to note for 2025…
As we look back at 2024, it has proven to be another eventful year for the property management sector. Below we provide an overview of some notable activity.
Spring
At the beginning of the year the industry was still awaiting the outcome of the Ground Rent consultation which closed in January, alongside the ongoing and complex amendments to the (then) Leasehold & Reform Bill. The Renters (Reform) Bill had been introduced as a promise to deliver on the Government’s commitment to “bring in a better deal for renters” and set out proposed changes to the private residential sector in England, and through the spring awaited further consideration by both houses. In regard to building safety, on the 13th of January 2024, new regulations (the sixth commencement regulations made under the Building Safety Act 2022) brought into force various sections in Part 4 of the Building Safety Act – including the much-anticipated requirements in relation the resident engagement strategy, part of the “golden thread” of information. Amidst this, discussion in Westminster – and in wider national debate – began to focus on when the Conservative Government would call a general election.
Summer
With the election called for the 4th of July, there was considerable rush from the previous government to decide whether to try and rush through their remaining bills or hold for the electoral outcome. Those that fell in the “wash-up” included the Renters (Reform) Bill, while the Leasehold & Freehold Bill was subject to last minute debate and passed on the evening of parliamentary closure in a form which one MP addressed as “suboptimal”.
Following the election, Wednesday17th July saw King Charles III give The King’s Speech – written by the new government. A total of 40 bills were included in the King’s Speech, including several holdovers from the previous government.
Of note, the speech introduced the intention to develop a new Draft Leasehold and Commonhold Reform Bill, the intention for which is to enact the remaining Law Commission recommendations relating to leasehold enfranchisement and the Right to Manage, and also to reinvigorate interest for commonhold. The King’s speech also introduced a new Renters’ Rights Bill aiming to provide greater rights and protections to people renting their homes, including ending no fault evictions and reforming grounds for possession.
At the end of July, we saw the first elements of the Leasehold & Freehold Reform Act come into force – specifically, from the 24th July the remedies that could be applied to regulated and unregulated charges and in building safety, while secton117 amended Schedule 8 to the Building Safety Act (BSA 2022) introducing an exception on leaseholder protection from legal and professional services costs relating to the liability of any person incurred as a result of a relevant defect, along with sections 118 repealing section 125 of the BSA 2022 and section 119 pertaining to notifications in connection with insolvency.
Autumn & Winter
Wednesday the 30th of October saw Chancellor Rachel Reeves introduce the first Labour Budget in 14 years. As widely trailed, this budget introduced measures to raise £40billion in tax revenues, principally aimed at reducing what Labour stated is a £20billion black hole in public finances inherited from the previous government.
With regard to the impact of the Budget on the property sector, some of the key points include:
Stamp Duty: The announcement that the surcharge on purchases of second homes and buy-to-let properties is to increase from three to five per cent effective straight away. For first-time buyers, there was no mention of freezing stamp duty thresholds in the Budget which means thresholds will increase for homebuyers from the end of March 2025 as previously announced. Capital Gains Tax for residential homes is to be held at current rates: 18 per cent and 24 per cent. On other assets, the lower rate of capital gains tax is to be increased from 10 per cent to 18 per cent, and the higher rate from 20 per cent to 24 percent. The Government also announced plans to make the mortgage guarantee scheme “permanently available” but will release more details in Phase 2 of the Spending Review which will conclude in spring 2025. On building safety, the chancellor has promised another £1bn to remove dangerous cladding over the next year.
What to expect in 2025?
As we approach the end of the year, and turn our attention to 2025, we can consider the statement issued on the 21st of November by Matthew Pennycook, the Minister for Housing, Communities and Local Government regarding the government’s intentions and trajectory for leasehold and freehold reform. The government acknowledges that commencement of the remaining provisions of the Leasehold & Freehold Reform Act 2024 will require “an extensive programme of detailed secondary legislation” and addressing some of the “serious flaws” in the 2024 Act through primary legislation. Switching on the Act in full will therefore take time”. The statement also highlights that intention to commence the Act’s provision to remove the ‘2-year rule’ in January next year with consultation next year on the Act’s further provisions.
On the draft Leasehold and Commonhold Reform Bill, the subject ofcommonhold will be subject to further consultation next year as will new reforms to the section 20 ‘major works’ procedure “legislative and policy options to reduce the prevalence of private estate management arrangements”.
As a footnote, the last year has also provided significant case decisions with notable implications for Landlords and Property Managers. Although this article cannot afford space to discuss these more fully, please visit the Legal News section of our website to find a comprehensive range of articles on these: News & Insights – JB Leitch
In closing, we wish all of you a very happy and restful Christmas.
