Many leasehold homeowners have been eagerly awaiting further news on the Government’s planned reform to improve home ownership by making it “cheaper and easier” for leaseholders to extend their lease term, buy their freehold and take over building management.
This follows the introduction of the Leasehold Reform (Ground Rents) Act 2022 which applies to new leases in England and Wales that will no longer be subject to any ground rents.
We have summarised below the main take away points from today’s speech and the reform Bill.
Topics to be answered in this article
Ground rent and lease extensions
The key take aways in relation to ground rent and lease extensions were plans to introduce the following mechanisms
- Introducing caps on Ground rent in existing leases with the aim of making it easier to secure mortgages and sell properties.
- Making the lease extension process easier and cheaper.
- Lease extension term to increase from 90 to 990 years.
- Removing the two-year ownership requirement before a lease extension can be done.
Changes to leasehold practices
- Capping landlord and managing agent fees for providing sales packs of information when selling a leasehold property, including a set timeline for this service.
- Greater transparency on service charge costs.
- Addressing buildings insurance commissions with more transparent administration fees.
- Adding more ways in which leaseholders can challenge freeholders over unfair practices.
- Removing the requirement for leaseholders to pay freeholder legal costs to address unfair practices.
- Banning the creation of leasehold houses so that only in exceptional circumstances can a new house in England and Wales be granted as a leasehold title rather than a freehold.
The Building Safety Act 2022
The Building Safety Act 2022 also features in the Bill; the Act aimed to put in place protections for leaseholders against building remediation costs and create an enforcement regime to hold freeholders to account, and this remains on the Government radar.
There are some specific areas which do not appear to have been addressed in the Bill, such as “marriage value” when calculating premiums payable to Landlords for lease extension.
As always, the devil will be in the detail when these reforms eventually become legislation.
How can Goughs help?
At Goughs, Lindsey Nolan is a specialist in lease extension matters and assists clients with extending their leases both informally and formally. If you are thinking of extending the lease of your property, or want to discuss the reforms in more detail, do please get in touch. Whilst the exact timescale for the reforms to become law is unclear, Lindsey will be following the timetable for delivery closely, and will be here to assist you when you are ready to move forward!