News

14 October 2019

Leasehold reform update

Professional services


According to the Ministry for Housing, Communities and Local Government (MHCLG), there are approximately 4.3 million leasehold homes in England, of which 67% are flats and 33% are houses. Despite there being more flats held on long leases, leasehold houses were the focus of the Law Commission’s report and consultation since 2017.



Specifically, the Government said it would:

• prohibit the creation of new residential long leases on houses

• restrict ground rents in newly established leases of houses and flats to a peppercorn value;

• work with the Law Commission to support existing leaseholders. This will include making buying a freehold or extending a lease “easier, faster, fairer and cheaper.”

 

Subsequent to consultation responses published in June 2019, the Government said it will bring forward legislation as soon as Parliamentary time allows, but unfortunately issues surrounding Brexit have adversely affected any such timeline.

 

While the measures set out above are a welcome development in the area of leasehold ownership, at this stage, there is no clear plan as to how to deal with the 67% of existing flats where current leases contain onerous ground rents and the lease extension system is complicated and costly.

 

On the one hand, leaseholder’s interests are to be protected but to what end? Could anyone who paid for a lease extension be retrospectively compensated?

 

Similarly, the interests of the freeholder are to be considered, i.e. the freeholder expects that ground rent would be receivable for the duration of the lease unless the lease is extended, in which case they would be adequately compensated. If changes are made, would this no longer be the case?

 

Many questions are yet to be answered. Only one thing is certain, any legislative changes will be on hold until Brexit is settled. An end to the uncertainty will be welcome news for leaseholders and freeholders alike.

 

Contact:
Gemma Quinn

gquinn@shw.co.uk

020 7389 1512


back to newspreviousnext

Author

Gemma Quinn

Valuation & Leasehold Enfranchisement

Director

see more
More from this author

Subscribe for more

share this article

Related articles

10 January 2022

Surgery valuations – Has the value of your premises increased?

full story

23 November 2021

Back to work: The Facilities Management role

full story

20 September 2021

SHW LEADS THE WAY IN AGILE WORKING

full story

14 September 2021

VP OR NOT VP: THAT IS THE QUESTION (And now we have an answer!)

full story