The government has announced the biggest reform of English property law in four decades, promising millions of leaseholders the right to extend their leases by up to 990 years. A cap will also be placed on the ground rent payable when a leaseholder chooses to extend their lease or buy the freehold – potentially saving tens of thousands of pounds.
The Housing Secretary, Robert Jenrick said: “We want to reinforce the security that home ownership brings by changing forever the way we own homes and [ending] 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.”
The government is also establishing a Commonhold Council to prepare the market for the widespread take-up of a commonhold system. Widely seen elsewhere in the world, commonhold involves blocks of flats being jointly owned and managed by residents, giving homeowners greater control over their costs.
Under current rules, leaseholders of flats can extend their lease, but usually only for 90 years, and can face high charges. In an effort to make costs more transparent, the government is introducing an online calculator to help leaseholders find out the cost of buying their freehold or extending their lease.
The government has pledged to abolish the so-called ‘marriage value’, which includes the assumed rise in value of the property once the lease is extended in the calculation of the extension fee.
Measures will also be introduced to protect older people living in retirement leasehold properties from increasing ground rents and “rip-off practices”.
The government has previously committed to restricting ground rents to zero for new build properties, following cases of disproportionate increases.
Professor Nick Hopkins, commissioner for property law at the Law Commission said: “We are pleased to see government taking its first decisive step towards the implementation of the Law Commission’s recommendations to make enfranchisement cheaper and simpler.”
Kubie Gold Associates are an independent local firm of estate agents specialising in the Rental, Sale and Property Management of Residential Property in the North-West and Central London market
