Announcement on Leasehold Reform
On 7th January 2021, the Ministry of Housing, Communities & Local Government filed a press release (here
) indicating the will of the Government to implement changes following the Law Commission Report “Leasehold home ownership: buying your freehold or extending your lease” delivered on 21 July 2020. Summary here.
The proposals are as follows:
- Both house and flat leaseholders would be able to extend their lease to a new standard 990 years (rather than 90 years under the 1993 Leasehold Reform Act) with a ground rent at zero.
- The abolition of prohibitive costs like ‘marriage value’ and setting of calculation rates to ensure this is fairer, cheaper and more transparent.
- The creation of the Commonhold Council should help to reinvigorate commonhold, ensuring homeowners will be able to call their homes their own.
I am currently a Leaseholder, what would this mean to me?
If these proposals are fully implemented, it would become easier and cheaper to extend your lease. You would be eligible for a lease extension of 990 years on top of the existing unexpired term rather than 90 years. Moving home would become easier as the process of extending your lease is simpler and more transparent and will take less time.
I am a Freeholder what would this mean to me?
The biggest impact would undoubtedly be the abolition of marriage value which currently boosts premiums for leases with less than 80 years unexpired depending on unexpired term and location. It is highly likely however that one of the very large, landed estates will challenge the proposals under Human Rights legislation and won’t give up without a fight.
None of the above is law yet and it will likely take considerable time to get a bill through Parliament, particularly if the challenges mentioned above gain traction. Watch this space!
Henry Adams have a team of Chartered Surveyors and RICS Registered Valuers based in Chichester that work closely with our network of offices across Sussex, Surrey and Hampshire to provide unrivalled professional advice based on sound local knowledge.
Please do not hesitate to get in touch with Henry Adams should you wish to discuss the above proposals and how they may impact on you.