The Housing Secretary, Robert Kenrick, has announced significant leasehold reforms that will affect millions of leaseholders.
Leaseholders will be given the right to extend their lease by a maximum term of 990 years. Currently, there is a right to extend by 90 years. As before, when the lease is extended, the leaseholder will no longer pay any ground rent to the landlord.
The announcement says a cap will be introduced on ground rent payable when a leaseholder chooses to either extend their lease or purchase the freehold. In relation to lease extensions, this presumably applies to voluntary lease extensions since no ground rent will be payable under a statutory lease extension.
Presently, when working out the premium (price) for a lease extension or buying the freehold, ‘marriage value’ is included in some circumstances, which increases the amount to be paid. Under the reforms, ‘marriage value’ is to be abolished. Also, an online calculator is being introduced to make it simpler for leaseholders to find out how much it will cost them to extend their leases or buy their freehold. To avoid having to pay ‘development value’ to the landlord, leaseholders will be able to voluntarily agree to a restriction on future development of their property.
There is to be more protection for elderly leaseholders in retirement properties, through the reduction of ground rents on all new retirement properties to zero.
Tyrone Grant, Head of Leasehold Enfranchisement at Grant Saw, said “We will have to see precise details of the reforms, but it is encouraging to see changes which make extending leases and purchasing freeholds simpler and less expensive, which should benefit the many owners of leasehold flats and houses”.
For more information, please contact Tyrone via email or contact the office on 020 8858 6971.