Significant changes in the housing sector are set to take effect next year, impacting millions of homeowners and renters nationwide. It’s crucial to stay informed about these upcoming updates.
Following a decisive general election victory earlier this year, the Labour Party is introducing these legislative changes. In October, Chancellor Rachel Reeves unveiled several updates to the property market during Labour’s inaugural Budget, alongside reforms on taxes, wages, and the cost of living.
The key areas of reform include renting, leasehold arrangements, stamp duty, and housing development.
The Renters’ Rights Bill
Expected to roll out in 2025, the Renters’ Rights Bill marks a significant overhaul of tenancy laws, aiming to enhance the rights and stability of private renters. This legislation will benefit England’s 11 million private renters and 2.3 million landlords, ensuring greater security for tenants while addressing homelessness risks.
Key Provisions:
- Abolition of ‘No Fault’ Evictions:
Section 21 of the Housing Act 1988 will be amended to prevent landlords from evicting tenants without valid legal reasons. Tenants will be safeguarded from eviction during the first year of their tenancy, provided they adhere to the agreement. After this, landlords will need to provide four months’ notice if they wish to sell or occupy the property. - Regulating Rent Increases:
The bill empowers tenants to contest unjustified rent hikes and limits landlords to one annual rent adjustment, based on current market rates. A formal notice must be served at least two months before the change takes effect. Tenants disputing increases can appeal to the First-tier Tribunal for review. - Bidding Wars Ban:
To eliminate unfair competition among renters, landlords and agents will be required to set and adhere to a fixed asking rent, prohibiting bids above this amount. - Pet-Friendly Policies:
Landlords will be required to reasonably consider tenants’ requests to keep pets, with tenants able to challenge refusals. Landlords may mandate pet insurance to cover potential damages.
Leasehold and Freehold Reform Act 2024
Labour plans to end the “feudal” leasehold system, which often burdens leaseholders with high, unpredictable costs from freeholders. The reforms aim to enhance transparency and fairness for the five million leasehold property owners in England.
Upcoming Changes:
- Removal of the Two-Year Rule:
Starting January, leaseholders will no longer need to wait two years before they can extend their lease or purchase their freehold. - Right to Manage Enhancements:
From spring, leaseholders in mixed-use buildings will gain greater rights to manage their properties, and freeholder costs will no longer burden leaseholders in most cases. - Transition to Commonhold:
By late 2025, a new Leasehold and Commonhold Reform Bill will outline plans to replace the leasehold system with a modern commonhold framework. In this model, individual units will have freehold status, with shared spaces managed collectively by property owners.
Stamp Duty Land Tax Adjustments
Significant updates to stamp duty regulations are also on the horizon for 2025:
- Increased Stamp Duty for Second Homes:
Starting October 31, the surcharge for second-home buyers and landlords will rise from 3% to 5% for properties priced between £40,000 and £250,000. - Support for First-Time Buyers:
The current exemption for properties priced up to £425,000 will remain in place until March 31, 2025. However, from April 1, the threshold will drop to £300,000. First-time buyers purchasing homes above this amount will pay 5% stamp duty for values up to £500,000. Properties over £500,000 will not qualify for the tax relief.
Stay informed about these pivotal changes as they could significantly impact your property decisions in 2025.
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