The UK housing market is currently facing a significant crisis, with both tenants and leaseholders being affected by a myriad of challenges. In response to this, the UK’s levelling up minister, Michael Gove, has announced plans to accelerate housing reforms designed to benefit these groups. This article by local letting agents in Winchester delves into the key aspects of these reforms, providing comprehensive insights on how they may impact the UK property market and improve the lives of tenants and leaseholders.
Leasehold Reform Bill: A Paradigm Shift for Leaseholders
The leasehold system in the UK has long been a contentious issue, with many arguing that it is an outdated and unfair practice. Under this system, homeowners do not have full ownership of their properties, but instead hold long-term leases. They are often required to pay a yearly ground rent to the freehold owner.
In response to growing concerns about the leasehold system, Gove has been granted approval to introduce a leasehold reform bill in the final session of this parliament. While the specifics of the bill are yet to be released, it is expected to include a cap on ground rents at 0.1% of the freehold value. Gove has also hinted at the possibility of scrapping the entire leasehold system in the future, describing it as an “outdated feudal system that needs to go”.
Renters Reform Bill: Protection for Tenants
Tenants have long faced uncertainty and insecurity due to the prevalence of “no fault” evictions, which allow landlords to evict tenants in England with just eight weeks’ notice and without providing any reason. To address this issue, Gove is set to publish a Renters Reform Bill, which was first promised in the 2019 Tory manifesto. The bill will abolish “section 21 orders”, thereby putting an end to “no fault” evictions.
Housing charities, such as Shelter, have long campaigned for the abolition of “no fault” evictions, arguing that the current legislation leaves renters in a precarious position. Polly Neate, Chief Executive of Shelter, has praised the government’s decision to move forward with the Renters Reform Bill, stating that it will finally put an end to the “broken, insecure, and unfair system” that has plagued tenants for years.
Addressing the Housing Shortage: Challenges and Criticisms
Despite these proposed reforms, both Gove and Prime Minister Rishi Sunak have faced criticism for not doing enough to address the UK’s chronic housing shortage. Critics argue that the government has bowed to anti-development “Nimbys”, hindering the construction of much-needed affordable homes.
The supply of new homes in the UK has fallen significantly short of the government’s target of 300,000, with only 232,820 new homes being built in the year to March 2022. Housebuilders’ output is predicted to fall by around 25% this year, partly due to increased mortgage costs following last year’s “mini” budget.
Gove’s department maintains that putting local communities in charge of development plans is the most effective way to meet the housing target. However, the housebuilding industry has criticised the government’s approach, citing issues such as the cumbersome planning system, the absence of help for first-time buyers, and the watering down of national housebuilding targets.
Looking Ahead: Gove’s Vision for the Future of Housing
Gove is expected to outline his vision for the future of the UK’s housing market in an upcoming key housing speech. He will likely advocate for the “densification” of cities, using high-density urban areas such as Paris as a model. However, it remains to be seen whether Gove’s proposals will be enough to address the pressing issue of housing shortages and affordability in the UK.
Despite Sunak’s insistence on not imposing more housebuilding on greenfield sites, some Conservative MPs argue that the “not in my backyard” tendency is harming those struggling to find a home. Simon Clarke, a former cabinet minister, has urged the government not to become “the party of nimbyism”, stressing the importance of addressing the housing crisis head-on.
The accelerated housing reforms proposed by Michael Gove have the potential to bring significant benefits to tenants and leaseholders in the UK. The introduction of the Leasehold Reform Bill and the Renters Reform Bill could help to create a fairer and more secure housing market for these groups. However, it is crucial that the government also addresses the underlying issue of housing shortages and affordability, ensuring that innovative solutions are implemented to create a more sustainable and accessible property market for all.
