What are the new leasehold reforms?
The changes to leasehold property law announced today include the following:
- It will be possible to extend leases to 990 years with zero ground rents;
- Lease extension premiums will be cheaper for leaseholders as a result of ‘marriage value’ payments being abolished where leases have already dropped below 80 years;
- An online calculator will be created to assist leaseholders to work out how much their lease extension or freehold will cost them; and
- Ground rents will be abolished in new leases that are being granted for the first time.
Reforms to leasehold property
The measures are claimed to be part of the ‘biggest reforms to English property law in 40 years’, making home ownership fairer and more secure.
When will new leasehold reforms take effect?
At the point of writing, the Government have not indicated when these proposals will become realised law, and so we are presently unable to give you formal advice as to how the announcements will directly affect you.
However, we will of course be keeping abreast of developments and will update clients individually in due course.
How will lease reforms effect ongoing transactions?
It is yet to be seen how these announcements will affect ongoing transactions or what (if any) recourse leaseholders will have if they have already agreed their lease extension or freehold purchase premium (or if it has been determined by the First-tier Tribunal), but are yet to formally complete their transaction.
Where individuals have agreed an ‘informal’ lease extension or freehold purchase, it may be that the alternative ‘statutory’ route may be more beneficial under the proposals (when enacted) if it means a better deal can be achieved.
These are both things that we shall be keeping an eye on in order to advise our clients appropriately once the answers become clear.
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