Leasehold Reform

On the 7th January, Robert Jenrick MP announced a sweeping leasehold reform. The reform shall impact millions of people, as leaseholders will be given the right to extend their lease by a maximum of 990 years at zero ground rent. The measures come as part of the biggest reforms to English property law for forty years, fundamentally making home ownership fairer and more secure.

Under the current law, many people face high ground rents, which combined with a mortgage can be quite unattainable for most. The leasehold reform will mean that any leaseholder that chooses to extend their home will no longer pay any ground rent to the freeholder. This reform shall enable those that dream of fully owning their home to do so without cumbersome bureaucracy and additional, unnecessary and unfair expenses.

Housing Secretary Robert Jenrick MP stated:

“We want to reinforce the security that home ownership brings by changing forever the way we own homes and end some of the worst practices faced by homeowners.

These reforms provide fairness for 4.5million leaseholders and chart a course to a new system altogether”.

The Commonhold model

The government is also now establishing a Commonhold Council- a partnership of leasehold groups, industry and government that shall prepare homeowners and the market for the widespread take-up of commonhold.

The commonhold model is widely used around the world and allows homeowners to own their property on a freehold basis, giving the greater control over the costs of home ownership.

Under current rules, leaseholders of flats can extend their lease at a zero ‘peppercorn’ ground rent, but usually only for 90 years. Leaseholders can also face high charges to extend their lease. For leasehold house owners, which face slightly different rules, they can also face barriers when they look to extend their leases.

The leasehold reform shall mean both house and flat leaseholders will now be able to extend their lease to a new standard 990 years with a ground rent at zero. Furthermore, a cap shall also be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder. The government is abolishing prohibitive costs like ‘marriage value’ and a new online calculator is being introduced to ensure that this process is fairer, cheaper and more transparent.

Further measures shall be introduced to protect the elderly. The government has previously committed to restricting ground rents to zero for new leases to make the process fairer for leaseholders. This will also now apply to retirement leasehold properties, allowing purchasers of these homes to have the same rights as other homeowners and are protected from uncertain and overpriced practises.

Leaseholders will also be able to voluntarily agree to a restriction on future development of their property to avoid paying ‘development value’.

Audley Chaucer is a law firm highly experienced in property law matters. For further information, please contact John Szepietowski.


Joseph Beams

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