Only part of it – namely amendments to the Building Safety Act 2022 and rent charge arrears – will come into effect in approx. 2 months time on 24th July 2024 leaving the ‘juicy’ important parts which in the main are:
- Lease extensions by 990 years instead of 90 years at a peppercorn rent,
- Scrapping of the 2 year mandatory qualifying wait,
- Freeholders to pay their own costs except in low value claims,
- Increasing the commercial property proportion from 25% to 50% to bring in more buildings to qualify for enfranchisement in mixed use buildings,
- Forcing of existing freeholders to retain non-participating flats and commercial areas in collective claims,
- Capping of onerous ground rent at 0.1% of settled market (freehold) value in enfranchisement claims,
- Marriage value no longer payable, and
- The prescription of the capitalisation and deferment rate
to be introduced in stages by Statutory Instruments. So don’t expect all of the changes to become law until 2025 – 2026 as secondary legislation will be needed to be drafted to bring these into effect.
What was lost was:
- The ban on forfeiture of long residential leases,
- The Renters Reform Bill to become law,
- The removal of ground rent for existing leaseholders, or :
- to cap it at £250 and the introduction of Commonhold.
Likely effect:
- If the existing Sportelli rate of 5% for flats (4.75% for houses) is retained, or a prescribed rate somewhere in between:
the change is likely to bring in marked to reasonable savings for midterm leases.
- If the deferment rate is prescribed at 3.5%:
the change is likely to offset all the saving made by the abolition of marriage value.
And for Leases over 80 years (that escaped paying any marriage value):
- the premium payable will increase if the deferment rate is prescribed below Sportelli rates which will go somewhat against the current government’s promised ‘strap line’ of making it “easier and cheaper” for leaseholders to acquire a new lease!
Keep a watchful eye on my blog for updates as when the promised changes become law.