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Housing reforms receive mixed reception

Government to consult Law Commission over leasehold reform

10 February 2017

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The government’s plans to fix England’s ‘broken’ housing market have received a mixed response from the legal profession, which has raised concerns over leasehold reform and the speeding up of planning and consent processes.

Earlier this week, the Department for Communities and Local Government published ‘Fixing our broken housing market’, a 104-page white paper which sets out ambitious measures to build more affordable homes and ensure greater protection for renters and homebuyers.

The communities secretary, Sajid Javid MP, pledged to force councils to produce up-to-date plans for housing demand, support SME housebuilders to boost competition, pursue leasehold reform, and increase transparency on land ownership.

The government’s plans were warmly received by the president of the Law Society, Robert Bourns, who said: ‘The white paper puts so many of the issues that solicitors see with their clients on a daily basis front and centre, and is an encouraging signal that the government will renew efforts to tackle some of these challenges. Any steps that remove unnecessary complexity or pitfalls for more than four million households is a welcome improvement.’

However, speaking to Solicitors Journal, Louie Burns, managing director of Leasehold Solutions, said: ‘The issues surrounding leasehold property have made headlines in recent months and although the white paper touched on some of the matters du jour – including ground rent charges and leasehold houses – it failed to adequately address the wider scandal of leasehold. It lacked any kind of detail at all so we will be watching closely for further recommendations to be released.’

The government said it was keen to identify opportunities to accommodate changes to leaseholds as part of the Law Commission’s 13th programme of law reform. Increasing and onerous payments, in particular those with short review periods, were among the main concerns highlighted by the white paper and will form part of a consultation on different ways to tackle any unreasonable leasehold abuses.

The government also intends to implement the Law Commission’s proposals on simplifying the restrictive covenant regime and will publish a draft Bill for consultation.

To speed up the delivery of homes, the government wants to implement several procedures, which include: streamlining the planning system; strengthening the scrutiny and focus on the delivery of building sites; and simplifying the completion notice process.

Chancery Lane has urged ‘optimistic caution’ over the government’s intention to speed up planning and consent processes that would allow local authorities to dispose of land held for planning purposes without the need for specific consent from the secretary of state.

‘The government’s desire to increase and speed up house building through improved planning law is really positive, with welcome signals on standardising the approach to assessing housing need, reforming developer contributions, and ensuring fit-for-purpose local plans are in place,’ said Bourns. ‘However, the detail of these complex laws must be well thought out, or they risk ambiguity and court actions undoing any gains, as previous attempts at reform in this area have found.’

Simon Hartley, a real estate partner at RadcliffesLeBrasseur, told the Solicitors Journal that the property industry would welcome measures addressing developers’ concerns about delays and inefficiencies in the planning process, but not provisions aimed at preventing land banking and imposing financial penalties to encourage the early delivery of schemes.

‘A more active use of compulsory purchase powers to promote development on stalled sites, strengthening local authorities’ powers to acquire land where schemes are not built within a reasonable time, would probably create additional work for property litigators,’ said Hartley. ‘Real estate investors are unlikely to welcome attempts to restrict the size of their portfolios or to force them to develop sites in unfavourable markets.’

Starter homes

In a further development, the government shelved plans to boost home ownership through starter homes, which would have required a 20 per cent discount on house prices on all new sites over a certain size.

Reacting to the change, Suzanne Benson, real estate partner at Trowers & Hamlins, said: ‘The mix of homeownership products will be an interesting question for individual local authorities as they seek to balance there being no minimum requirement for starter homes with a general duty to promote their supply.

‘The removal of the 20 per cent mandatory requirement for starter homes across new schemes will be welcome news for those wishing to offer more established products, including shared ownership.’

Ian Graham, also a partner at the firm, said the paper announced changes which ‘go some way to answering criticisms levelled at the policy’ behind starter homes. ‘There is to be a 15-year clawback period on the discount given on purchase to alleviate concerns as to the distorting effect on values of such a discount,’ he added.

‘Local authorities will not be obliged to include starter homes in new developments but rather there will be a policy expectation that at least 10 per cent of homes on a scheme will be for affordable home ownership. That can include shared ownership and rent to buy as well as starter homes. So some signs of a lessening of the previous fixation on the starter home concept but not a volte face.’

Matthew Rogers is a reporter at Solicitors Journal

matthew.rogers@solicitorsjournal.co.uk | @lex_progress

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housing white paper The Law Society Department for Communities and Local Government