Lease extension reforms announced
Robert Jenrick, Housing Secretary, announced today that millions of leaseholders will be given a new right to extend their lease by 990 years.
Niki Adkins, Head of Frettens’ specialist Lease Extension & Enfranchisement Team, gives an overview on the announcement from the government, and the claims that the reforms could save households ‘thousands to tens of thousands of pounds’.
What are the new leasehold reforms?
The changes to leasehold property law announced today include the following:
- It will be possible to extend leases to 990 years with zero ground rents;
- Lease extension premiums will be cheaper for leaseholders as a result of ‘marriage value’ payments being abolished where leases have already dropped below 80 years;
- An online calculator will be created to assist leaseholders to work out how much their lease extension or freehold will cost them; and
- Ground rents will be abolished in new leases that are being granted for the first time.
Reforms to leasehold property
The measures are claimed to be part of the ‘biggest reforms to English property law in 40 years’, making home ownership fairer and more secure.
Housing Secretary Rt Hon Robert Jenrick MP, quoted on gov.uk, said of the leasehold reforms:
“Across the country people are struggling to realise the dream of owning their own home but find the reality of being a leaseholder far too bureaucratic, burdensome and expensive.
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 4.5 million leaseholders and chart a course to a new system altogether.”
When will new leasehold reforms take effect?
At the point of writing, the Government have not indicated when these proposals will become realised law, and so we are presently unable to give you formal advice as to how the announcements will directly affect you.
However, we will of course be keeping abreast of developments and will update clients individually in due course.
How will lease reforms effect ongoing transactions?
It is yet to be seen how these announcements will affect ongoing transactions or what (if any) recourse leaseholders will have if they have already agreed their lease extension or freehold purchase premium (or if it has been determined by the First-tier Tribunal), but are yet to formally complete their transaction.
Where individuals have agreed an ‘informal’ lease extension or freehold purchase, it may be that the alternative ‘statutory’ route may be more beneficial under the proposals (when enacted) if it means a better deal can be achieved.
These are both things that we shall be keeping an eye on in order to advise our clients appropriately once the answers become clear.
Leaseholders: So, what happens next?
The planned reforms have only just been outlined as above, though the government has not yet made an announcement as to when they will take effect.
Our advice as to your options will depend on your circumstances, so please feel free to get in touch. In some limited circumstances, it may be best to sit tight and wait for a timetable to be announced; however, given that commentary has suggested that reform legislation won’t be introduced until 2024/2025, the majority of people are probably best advised to push on and resolve their lease issues sooner rather than later.
As soon as we know, we will update our site and share on social media and by email. Individual existing clients will be contacted directly with advice on their next steps as and when it becomes clear what should be done.
If you wish to be the first to know about timetables and future changes, you can sign up to our newsletter here. Be sure to tick the ‘property & landlord/tenant’ box.
A Leasehold Specialist's View
Niki Adkins, Head of Frettens' specialist leasehold team on the changes:
“I’m delighted that real progress appears to now be on the horizon for leaseholders who are in a less than favourable position. The reforms hopefully mark the start of a new era of leasehold ownership, which I’m excited to see develop.
I have two new team members joining the team on 18th & 25th January, which looks like fortunate timing for our increasing number of leasehold clients."
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