Noticeably absent from recent government announcements is any proposal to abolish statutory right-to-buy. To the contrary, Angela Rayner has signaled her commitment to keep the policy, Even if some of the crazy discounts are to be scaled back. Currently, around 40% of ex-right-to-buy properties are owned by private landlords, Meaning that councils have to rent back on their own estates just to meet their statutory housing obligations. And all paid from housing benefit. That’s you and me. No wonder first-time buyers and private renters are priced out of the market. But not everyone who has exercised their right-to-buy is a winner.
It is the high-rise leaseholders who have come off worst. They are the ones facing five figure service charge bills when their local council decides to replace windows. When everyone else living in a block gets it for nothing. But something has to give if you want to rebuild social housing stock and solve Britain’s housing crisis.
King’s Speech 2024 – what it means for conveyancers and other property professionals.
We are not talking about the big-ticket stuff – like House of Lords reform. Instead, we are focusing on the small-print in the Starmer agenda. The things which are likely to affect our day-to-day work. We also mention things which we would have expected to see mentioned in the King’s Speech, on which there has so far been silence. Here are the things which interest us.
A Planning and Infrastructure Bill
This is exciting. For too long, the ‘no’ lobby has been in the ascendancy. And all at a time of housing crisis. Planning has become two politicised. Planning pre-conditions have become long shopping lists, within a process which has become like treacle. Even so, the government’s announced proposals for reforming the planning system are modest: with the restoration of house-building targets and the reclassification of some parts of the green belt. When what is really required is a speeding up of the whole planning process. Which shouldn’t be problematic for a self-financing public service. We’re sure many developers would be willing to pay a little bit extra by way of planning-fees, to pay for the additional staff needed to get their applications through the system. And if it is blocked by local politicians, to get it quickly in front of a government-appointed planning inspector. Why should that be difficult?
Leasehold Reform
Some of it we have heard before. Like replacing a leasehold system which has existed for more than 1000 years by a new system of commonhold.  The legislation already exists in the Commonhold and Leasehold Reform Act 2002.  But it didn’t work when Tony Blair tried to introduce it more than 20 years ago. Because nobody wanted it. So why will it work now? Despite its imperfections, residential leasehold is the most workable system for selling flats and maisonettes. So wouldn’t it be better just to make the reforms needed to get the existing residential leasehold system right, instead of trying to force something which nobody wants. At the moment, we are waiting for the new government to bring into force detailed provisions of the Leasehold and Freehold Reform Act 2024, which received royal assent in the last days of the Conservative government. But it is not just about bringing it into force, because the detail will be in the regulations which, as far as we’re aware, have yet to be published. So there is some work for the new government to do before that legislation can take effect. We are also expecting the new government to waste no time in pushing forward with the Renters Reform Bill, which had been tabled by the previous Conservative government but dropped as soon as the general election was called. It always seemed to us that the last government’s commitment to removing section 21 no-fault evictions was always a little half-hearted, we assume because of the landlord-lobby. Funny thing about the section 21 evictions process, was that it was not seen as problematic in 1989 when the private-rented sector was opened up, because the residential market was so different, with residential landlords competing with each other for the best tenants, not the other way round, as it is today. It meant that if, in 1989, you were a reputable tenant who was unlucky enough to be given the section 21 notice of eviction, there would be dozens of other potential landlords bidding to accommodate you. And remember, that in 1988, most councils still had their social rented stock.
Absences
As well as the reforms which the new government has announced, there are also some things missing, which we would have expected to find within the King’s Speech or other government announcements. We are surprised that there has been no mention at all of any scaling back of right-to-buy, not even from the crazy discounts introduced by the Cameron government. What is scandalous is that up to 40% of ex-right-to-buy properties are now in the hands of private landlords, meaning that local authorities are having to rent back ex-right-to-buy properties on their own estates, just to meet their statutory housing needs. What nonsense is that? Is our system of housing benefits really so generous that it can afford to throw money at private landlords, because there is no longer any significant affordable rented sector? No wonder first-time buyers and private renters have been priced out of the housing market. The other thing, for which there has been no mention, is any revamp of the measures brought in by the Gordon Brown government to bring long-term empty dwellings back into occupational use. The problem with Brown’s empty dwellings management orders, was that the whole process was too cumbersome to be of any use. At the last count there were approximately 260,000 empty dwellings in the UK. What a waste!
Legislative Agenda
We have also taken a few moments to look at the government bills which are currently before Parliament. Presently, there are only five government bills, most of which we think are uncontroversial. These include a new Arbitration Bill, building on the existing 1996 legislation, to restore London as the world’s arbitration capital. Who is going to argue with that? And there is also the bill to re-nationalise Britain’s railways. With only four clauses, this bill is astonishingly short for what has become one of the new government’s landmark policies. It does no more than prohibit a re-letting of existing railway franchises except to a government-owned company.
With a new government on 5 July 2024 now a cert, it is time to think about what this means for UK conveyancers. Here are our own predictions for the year ahead.
Leasehold and Freehold Reform Act 2024
As this non-controversial piece of legislation reached the statute book in the closing days of the Sunak government, it only remains for Starmer to issue regulations bringing it into force. We expect this to be amongst the first tasks for the new Labour government. The legislation is important because it changes the process for dealing with statutory residential lease extensions and enfranchisements as well as regulating freehold estate management.
Renters Reform Bill
This bill, which was already part way through parliament, was one of the legislative casualties of the general election. The key provision of this bill was the removal of section 21 non-fault evictions. Although the removal of section 21 evictions is not quite a roll-back to the bad old days of rent-controls, it will certainly make many would-be landlords and mortgage lenders think twice before going into this market. It may also lead to a loss in private rented accommodation as landlords sell up when tenants vacate instead of re-letting. When it was first introduced on 1 April, 1989, the ability of landlords to regain possession of their properties on two months notice was not particularly problematic because there was a healthy housing market, which made it easier for prospective tenants to pick and choose where they wanted to live and to negotiate how much they wanted to pay. Unfortunately, that is no longer the case because of the depletion of the social-rented sector. So our expectation is that the new government will waste no time in re- launching this bill and pushing it through to royal assent.
Right-to-buy
Unlike Scotland and Wales, we are not expecting the new government to abolish right-to-buy in its entirety but simply to scale it back, in terms of discount, to what was available when Gordon Brown left office in 2010. At that time, the maximum discount on a right-to-buy sale was capped at £16,000. Our expectation is that this £16,000 cap might be increased to reflect price-inflation but fall well short of the generous discounts introduced by David Cameron when he took power in 2010. What this means is that purchasing under right-to buy may no longer be the attractive proposition which it is today. There are also the transitional arrangements which will need to be put in place for right-to buy purchases which are underway at the time the new legislation is introduced. We are not expecting any changes to right-to-buy to operate retrospectively, which would mean that work-in-progress will be allowed to continue to completion of the transaction.
Reform of the Town Planning System
This is going to be the most difficult task for the incoming government as it will be trying to push back against a bureaucratic inertia which has built up over decades and in which the ‘No!’ lobby has remained supreme. It is not just about restoring the house building targets which had already existed until the recent abolition by the outgoing Conservative administration. It is about breaking through the treacle. The bottom line is that town planning is too politicised. With too many vested interests. It shouldn’t be like that. It’s about making the most efficient use of land. Key to breaking through this inertia is to simplify and speed up the appeals process, so that any developer who feels that their application is being frustrated by local politicians, can quickly get their planning application referred to a third party for determination.
V. Charles Ward
Solicitor and Legal Associate RTPI – 15th June 2024
If I outstay my welcome in a camera-controlled car park, I will probably be issued with a penalty charge notice.
That notice would, in the ordinary course of events, be posted to the registered address of my motor vehicle. But supposing I don’t receive that PCN because I have moved away from my old address and have not yet got around to updating the DVLA with my change of address? And supposing I don’t receive any of the follow-up correspondence, during which time the original £60 PCN has accumulated to £600? The first I know about it, is when a bailiff comes knocking at my door. But Mr Bailiff, I didn’t receive anything?
Tough! Parking enforcement is entirely a matter of process. No allowance is made for oversight. Fortunately, the law is not always like that.
Supposing a civil judgment is entered against me in my absence for legal proceedings which I knew nothing about. Even if the papers were correctly served, I might still have good grounds for asking a district judge to set aside that judgment if I can convince the judge that it would be unfair to let the judgment stand, because I had an arguable defence. A similar issue arose in relation to two recent cases at the Upper Tribunal Lands Chamber, which concerned situations where papers had been correctly served by a local authority but had not come to the attention of the intended recipient.
In the first case, Tabassam v Manchester City Council [2024] UKUT (LC), Ms Tabassam was held to have had a ‘reasonable excuse’ for not complying with a statutory improvement notice which had been sent to the proprietorship address stated on her land registry title, as well as well as to the property itself. But neither notice reached her and she therefore did not respond. In default of her response, Newcastle City Council imposed a financial penalty against her for failing to comply with the improvement notice.
The reason why Ms Tabassam had not received the improvement notice was that she had moved away from her old address and had not updated the land registry record. She pleaded ‘reasonable excuse’. Her plea was upheld as it was said that the council could have found a more up to date address if it had searched other internal records.
In the case of Newcastle City Council v Abdullah [2024] UKUT 140, the city council had adopted a landlord licensing scheme under the Housing Act 2004 for the area within which Mr. Abdullah’s property was situated. A licence issued by the council permitted Mr Abdullah to manage premises at 29 Gillies Street subject to standard conditions requiring him to provide certain information on demand. The council later requested information from him by letter sent by ordinary post and addressed to him at an address he no longer occupied. The key question in that appeal was whether a demand which never came to his attention was nevertheless an effective demand for the purposes of the licence condition. If it was, Mr. Abdullah’s failure to comply with that condition would have been an offence contrary to section 95 (2)(b) of the Housing Act 2004 unless he could prove that he had a reasonable excuse for that failure.
In this case, the upper tribunal found that the notice had been properly served, even though there was other e-mail correspondence on an unrelated matter between Mr. Abdullah and the council which quoted a more up-to-date address. Nevertheless, the upper tribunal found against Mr. Abdallah on the question of whether service of the notice was valid.
What made Mr Abdullah’s case different from that of Ms Tabassam was that he was under a legal duty to notify the council of any change in his address. However, the upper tribunal left open the issue of ‘reasonable excuse’, which was remitted back to the first-tier tribunal.
One of the puzzling things about these two cases is why they were ever allowed to reach the Upper Tribunal. Wouldn’t a wiser local authority, in those circumstances, simply have accepted the owner’s claim that they had not received the earlier documentation, and started the whole process again? Yes, starting again might be annoying. But it’s a damned sight cheaper than losing a ‘reasonable excuse’ argument in the upper tribunal.
Thousands of people have done well out of Margaret Thatcher’s right to buy, including Labour’s Angela Rayner. But not everyone has been so lucky. Amongst the least-lucky are those leaseholders who purchased high-rise flats under right-to-buy and are now facing sky-high service charges. Amongst those, are the leaseholders in Verulam House in Hammersmith Grove who are facing service charges of between £17,500 and £21,500 for window replacements which they say are not needed. One of the problems for right-to-buy leaseholders is that although they are the ones picking up the bills, they have little say in the matter because they will always be in a minority.
Although residential leaseholders now have extensive rights to take over the management of their flats, they can only do this by acting collectively. For example, the statutory ‘right to manage’, introduced by the Commonhold and Leasehold Reform Act 2002, can only apply where a majority of qualifying leaseholders are on board with it. But this is of no help to right-to-buy leaseholders where the majority of flats in a high-rise block are still owned by the local authority and let out as social housing. The most, to which those right-to-buy leaseholders are entitled, is the right to be consulted over proposed service charges under section 20 of the Landlord and Tenant Act 1985. But even this right to be consulted, is cut down for right-to-buy leaseholders because they do not have the same right to nominate their own contractor as is enjoyed by other private leaseholders. And even the prices may be higher as councils are constrained in their choice of contractor because of the need to comply with rigid procurement regulations, which means that they cannot shop around for the best deal.
BRUCE AND HOLLY 