In January 2021, the Housing Secretary announced that millions of leaseholders 'will be given a new right to extend their lease by 990 years'. However, there was little clarity given.
Formal legislation is yet to come, and still seems a long way off!
Yet, the reforms are an important consideration for any leaseholder...
In this article, Leasehold Property Paralegal Hannah Faith outlines what the reforms are and discusses their potential impact on leaseholders.
What are the reforms?
The changes to leasehold property law include:
- 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.
UPDATE: The leasehold reforms have now been passed as of May 2024, bringing major change to leasehold properties. Read about those changes here.
So, when will reform legislation take place?
Whilst we are confident the Government are going to enact some kind of reform legislation we are completely in the dark as to when that reform will take place.
Some legal commentators have suggested that, whilst simpler legislation (like the abolition of ground rents in new leases) may come sooner than later; real, tangible and – if you will, tasty – reform legislation may not be forthcoming until 2024 / 2025.
What do the reforms mean for leaseholders with short leases?
This presents its own problem for leaseholders who are presently stuck with a leasehold property with a short lease or a nasty ground rent. The majority of those leaseholders will likely want to sell or re-mortgage before 2024/2025, in which case, they can’t afford to wait that long.
As a result, those people may choose to ignore the announcement and proceed with their lease extension / enfranchisement plans as if the Government hadn’t said anything at all.
What about leaseholders with long leases?
For those with very long leases (over 100 years, for example), they may be happy to wait until 2024/2025 to see how they may benefit.
We would hope that progress is made sooner, but only time will tell.
Are the reforms set in stone, or could they change before they become legislation?
Whilst the Government have outlined some of their proposals (e.g. making lease extensions cheaper/easier etc.), there is no guarantee that some of those proposals will not be watered down or even abandoned.
In order to enact legislation, one of the things that the Government has to do is debate the proposed legislation in the House of Commons.
There are arguments to be had on both sides of the leaseholder/freeholder camp, and we may therefore see variations of the January 2021 announcement actually enacted.
Everyone’s individual circumstances will be different, and so our advice must be tailored to anyone who contacts us about their concerns and queries.
Leasehold specialist solicitors in Bournemouth, Christchurch, Poole and the New Forest
Our specialist Leasehold Property Team is one of the largest in the region and are happy to discuss any of the issues outlined in this article.
If you have any questions, you can call 01202 499255 and a member of our bright team will be happy to discuss your individual circumstances.
We offer all new clients a free initial chat with one of our bright, knowledgeable lawyers.
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