What's the priority for property and planning legislation in this political new world?

On 17 July 2024, the King's Speech announced the government's legislative agenda following the Labour party's victory at the polls. There were no surprises from a real estate or planning perspective, as the proposals reflect Labour's Manifesto, however that does not mean the agenda lacks ambition. It's going to be a very busy (and exciting) time for the property sector over the coming months.

Planning reform

The government will bring forward a Planning and Infrastructure Bill to "get Britain building" and "accelerate the delivery of high-quality infrastructure and housing". This Bill will focus on making improvements to the system at a local level, "modernising" planning committees and increasing the capacity of local planning authorities, which is very welcome given the current level of under-resourcing.

The Planning and Infrastructure Bill will also:

• "[streamline] the delivery process for critical infrastructure" and "simplify the consenting process for major infrastructure projects." This will include updating "new and improved" National Policy Statements every five years;
• further reform compulsory purchase compensation rules "to ensure that compensation paid to landowners is fair but not excessive where important social and physical infrastructure and affordable housing are being delivered"; and
• "[use] development to fund nature recovery where currently both are stalled … work[ing] with nature delivery organisations, stakeholders and the sector over the summer to determine the best way forward." This seems to refer to finding solutions to the current block on development resulting from Natural England's nutrient neutrality guidance.

Further detail is needed to see how all this will be achieved, but these proposals are encouraging.

What was missing?

The past few years of planning reform have resulted in uncertainty which has impacted development planning and investment decisions. The new government seems to have recognised that quick and decisive action is needed to achieve the stability that the sector needs. This can often be better achieved through secondary legislation and changes to national planning policy rather than primary legislation. This might explain why a "Towns Bill", which had been widely expected to deliver the new towns promised in the government's manifesto, was missing from the King's Speech, although it may also be the case that the legislative framework contained in the exiting New Towns Acts is sufficient to progress the development of the promised new towns.

Whilst the English Devolution Bill announced today might include new powers for local planning authorities to create new towns, the government might instead decide to prepare secondary legislation pursuant to existing but as yet unimplemented powers under Part 8 of the Levelling Up and Regeneration Act 2023, which enables local authorities to designate land for locally-led urban development corporations or new town development corporations – we wait to see. Many other of the government's manifesto promises will be brought forward through the changes to national planning policy to be announced at the end of this month.

Improving the use of planning data?

When in the Shadow Cabinet, the new Housing Minister Matthew Pennycook said that "a discrete number of targeted changes to the existing system" was the way to tackle planning reform, and this seems to be the approach being taken so far. Perhaps the proposed Digital Information and Smart Data Bill, intended to "enable more and better digital public services", might help in this regard, building on existing proposals to improve the use of data within the planning system to speed up decision-making and better involve communities.

New strong community right to buy

A last point worth noting is the new "strong" right for communities to buy valued community assets, to be brought forward in the English Devolution Bill. This will extend the existing "right to bid" in relation to nominated Assets of Community Value and is intended to "help to revamp high streets and end of the blight of empty premises".

Renters reform

With a new Renters' Rights Bill, the government has announced its intention to succeed "where the previous government failed" in terms of overhauling the private rented sector, and have reiterated their manifesto pledge to abolish Section 21 'no-ground' terminations, and to expand the grounds on which landlords can retake possession of their premises. The bill will also:

• Strengthen tenants’ rights and protections, empowering tenants to challenge rent increases.
• Give tenant the right to request a pet, which landlords must consider and cannot unreasonably refuse. Landlords will be able to request insurance to cover potential damage from pets if needed.
• Apply a Decent Homes Standard to the private rented sector to ensure homes are safe, secure and hazard free.
• Apply ‘Awaab’s Law’ to the sector, setting clear legal expectations about the timeframes within which landlords in the private rented sector must make homes safe where they contain serious hazards.
• Create a digital private rented sector database.
• Introduce a new ombudsman for quicker, cheaper dispute resolution.
• Make it illegal for landlords to discriminate against tenants in receipt of benefits or with children.
• Strengthen local councils’ enforcement powers.

None of this is a huge surprise, as it is all ground that was well trodden in the previous government's Renters (Reform) Bill. That bill failed to make it on to the statute books before purdah. Whilst the change of name from "Renters (Reform) Bill" to "Renters' Rights Bill" may indicate that the government does not intend to simply resurrect the former bill as it was left, Parliamentary consideration of the issues around reform of the private rented sector was gaining real momentum, which our new government should seize before appetite cools again. The Renters (Reform) Bill suffered lengthy delays due to issues with student accommodation, concerns over mis-use of the new grounds of possession and serious questions over how our court system would cope with an inevitable increase in its case load (see our blogs and podcast covering the latest position on the bill before purdah). What is not addressed in the new government's statement of intent is how they propose to reform the process for obtaining possession via the courts, which are under-funded and operating with significant delays.  If the proposed bill is passed before the infrastructure of the courts is reinforced to actually allow the reforms to work in practice, one has to question whether the government will be able to deliver on its promise to protect those renting their homes if the system is not fit for purpose. 

Residential long leasehold reform

A draft Leasehold and Commonhold Reform Bill could produce some more fundamental changes to the current system of residential long leasehold ownership. There is a definite emphasis being placed on banning new leasehold flats (as new leasehold houses have already been banned in the Leasehold and Freehold Reform Act 2024, which was passed before purdah albeit these sections are not yet in force) and presenting commonhold as the ownership model of the future. There is an acknowledgement from the government in the background briefing to the King's Speech that "the commonhold legal framework is out of sync with modern development methods, and the current rules around conversion from leasehold to commonhold are unworkable".  We whole-heartedly agree with this statement -  commonhold has been around as the third legal basis of property ownership since 2003 but has (to all intents and purposes) never been used.  It is equivalent to the condominium formulation that applies elsewhere in the world.  The question has always been whether any lender would lend on it in its current form. Consultation as to how commonhold should be improved is inevitable, but this will be a lengthy process, and perhaps explains why the government is also proposing to implement the Leasehold and Freehold Reform Act 2024, so that some of the reforms to the residential long leasehold system will take effect whilst the not insignificant process of reforming commonhold takes place.

It seems that residential long leasehold ownership will not be abolished completely though, as tackling ground rents in existing residential leases is back on the agenda, with a proposal to tackle them "so [long leaseholders] no longer face unregulated and unaffordable costs". We await the details of what form this might take and how much of an impact it will have for existing leasehold properties, but the government has stopped short of declaring an abolition of grounds rents at zero compensation for landlords, a proposal strongly favoured by Michael Gove, former Secretary of State for the Department of Levelling Up, Housing and Communities, but one at high risk of legal challenge on human rights' grounds.