Leasehold Reforms

Changes to the rights of freeholders to collect ground rent will mean a positive change for leaseholders.

The UK government has proposed changes to property legislation following a consultation by the Law Commission published its final paper Reinvigorating Commonhold: the alternative the leasehold ownership.

The changes will allow leasehold owners to extend their lease for up to 990 years at zero ground rent and an online calculator will give them an idea as to the costs of buying their freehold or extending their lease. The proposals include the development of a regulatory regime for managing agents, timescales for agents to respond to queries, a mandatory standard form in place, and a redress scheme to deal with complaints.

Under the current law leaseholders can only extend their lease for 50 years and allows freeholders to charge leaseholders ground rent and costs in extending their lease that reflect an increase in the value of the property. This makes it a less attractive sale to a potential buyer leaving the leaseholder in a situation where they incur increased costs and are unable to sell their leasehold.

The reforms will be welcomed by leaseholders as they will see a more regulated industry giving them the confidence when buying or selling their leasehold.

Significance of the reforms

The reforms will see thousands of leaseholders saving costs and it will allow them to buy a freehold at a cheaper cost leading to more straightforward transactions when buying or selling a property.

This will in turn lead to fewer houses sitting empty with short leases or high ground rents in place. Saving owner-occupiers money and improving investor’s returns, the leasehold reform is good news for many in the property industry.

You can keep track of the proposals by going to the following website https://commonslibrary.parliament.uk/leasehold-reform-in-england-and-wales/.