The Government has today announced reforms that will make it easier and cheaper for leaseholders to buy their leases.
As part of the biggest reforms to English property law in 40 years, millions of leaseholders will be given the right to extend their lease by a maximum of 990 years at zero ground rent.
This is of huge importance and benefit to anyone wishing to extend their lease on their house or flat.
Under current rules, leaseholders of houses can only extend their lease once for 50 years with a ground rent. Leaseholders of flats can extend as often as they wish at a zero ‘peppercorn’ ground rent for 90 years.
The new changes mean that any leaseholder who chooses to extend their lease on their home will no longer have to pay ground rent to the freeholder and could save some leaseholders tens of thousands of pounds.
A cap will be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder. Furthermore, the calculation rates will be set to ensure that this is fairer, cheaper and more transparent. An online calculator will be introduced to make it simpler for leaseholders to work out the cost of buying their freehold or extending their lease.
The government is also abolishing prohibitive costs like ‘marriage value’, and Leaseholders will be able to voluntarily agree to a restriction on future development of their property to avoid paying ‘development value’.
The Housing Secretary Robert Jenrick said in the announcement:
“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.”
Healys Partner and specialist leasehold advisor, Daniel Winslow, has said:
“These changes are ground breaking for all who wish to extend their lease and will make the process more transparent, less adversarial and therefore more cost effective. Whilst it will enable all leaseholders to obtain better terms, the change will have a particular impact on those on a short lease (below 80 years) and who are presently priced out of obtaining a lease extension. The removal of marriage value in particular will make obtaining a lease extension much more affordable, thus allowing those previously unable to extend the ability to future proof their property.”