Govt announces new leasehold reforms

Millions of leaseholders are to be given the right to extend their lease by a maximum term of 990 years at zero ground rent, Housing Secretary Robert Jenrick has announced.

The government said the measures come as part of the “biggest reforms to English property law for 40 years”.

Under current rules, leaseholders of houses can only extend their lease once for 50 years with a ground rent. This compares to leaseholders of flats who can extend as often as they wish at a zero ‘peppercorn’ ground rent for 90 years. However, the new changes mean both house and flat leaseholders will now be able to extend their lease to a new standard 990 years with a ground rent at zero.

The government confirmed that a cap will also be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder.

For some leaseholders, these changes could save them “thousands, to tens of thousands of pounds”, the Ministry of Housing suggested.

Jenrick said: “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.”

The government is also establishing a Commonhold Council – a partnership of leasehold groups, industry and government – that will prepare homeowners and the market for the widespread take-up of commonhold. The commonhold model allows homeowners to own their property on a freehold basis, giving them greater control over the costs of home ownership.

Commissioner for Property Law at the Law Commission, Professor Nick Hopkins, added: “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.

“The creation of the Commonhold Council should help to reinvigorate commonhold, ensuring homeowners will be able to call their homes their own.”

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