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Thursday 7th January 2021 Yashmin Mistry 

Government announces reforms for the leasehold sector

Huge news for Leasehold…but as always, the devil will be in the detail!

Following the Law Commission’s reports on proposed reforms to leasehold, commonhold and right to manage, today, Robert Jenrick, the Housing Communities and Local Government Secretary has announced reforms for the leasehold sector as a whole.

The main take away points from today’s announcement are as follows:

· Leaseholders (of both flats and houses) will be given the right to extend their lease by a maximum term of 990 years at zero ground rent.

· A cap will be introduced on ground rent payable when a leaseholder chooses to either extend their lease or purchase the freehold of their house.

· An online calculator will be introduced to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.

· Leaseholders will also be able to voluntarily agree to a restriction on future development of their property to avoid paying ‘development value’.

· The proposed changes will also now apply to retirement leasehold properties (homes built specifically for older people), so purchasers of these homes have the same rights as other homeowners; and

· The government is also now establishing a “Commonhold Council” - a partnership of leasehold groups, industry and government - that will prepare homeowners and the market for the widespread take-up of commonhold. A plan for the transition to commonhold over the course of this Parliament will be set out by the Ministry of Housing, Communities & Local Government (MHCLG) in due course.

Under the current system, too many leaseholders find the process for extending their lease or buying their freehold too complex, lacking transparency and prohibitively expensive. This package therefore seeks to address this, by taking account of the legitimate rights of freeholders but addressing historic imbalance to ensure fairness for leaseholders. MHCLG will continue to ensure these objectives are met as they bring forward reforms.

For details of the full announcement, please click here: https://www.gov.uk/government/news/government-reforms-make-it-easier-and-cheaper-for-leaseholders-to-buy-their-homes


Legislation will of course need to be enacted and as always, the devil will be in the detail in terms of how and when these changes will be implemented.

We understand that it is intended that legislation will be brought forward in the upcoming session of Parliament to set future ground rents to zero. This will be the first part of a two-part reforming legislation in this Parliament.

For more information on the proposed reforms and on leasehold generally, please contact Yashmin Mistry, Partner and Head of Leasehold by email ymistry@jpclaw.co.uk / telephone: 020 7644 7294 or LinkedIn.


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