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Leasehold reform part 1 - at last!

Written by: Maryanne Bowring 07/01/2021
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We could all do with some good news at the moment - and here it is. The Government has just announced that millions of leaseholders around the country are to be given a new right to extend their lease by 990 years at zero ground rent.

Housing secretary Robert Jenrick made the announcement today, pledging that the changes will save leaseholders tens of thousands of pounds. The government is to abolish prohibitive costs like ‘marriage value’ and says it will set the calculation rates to ensure a fairer, cheaper and more transparent system of lease extension and purchase. An online calculator will also be launched to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.

Legislation will now be brought forward in the upcoming session of Parliament to set future ground rents to zero. This will also apply to retirement leasehold properties that are built specifically for older people, so purchasers of these homes have the same rights as other homeowners. This has not been the case in the past and is grossly unfair.

In future, leaseholders will also be able to voluntarily agree to a restriction on the future development of their property to avoid paying ‘development value’.

Leasehold reform has been a long time coming. Finally government has grasped some of the inequities of the leasehold system and has taken action. We welcome today’s announcement as a huge step in the right direction. But this is only the first part of the biggest reforms to English property law for 40 years. The next step is for government to respond to the remaining Law Commission recommendations, including commonhold.

To take this forward, a Commonhold Council is being set up. This will be a partnership of leasehold groups, industry and government - that will prepare homeowners and the market for the take-up this form of tenure that was first introduced in the 1980s but has never taken off. Industry commentators think this is due in large part to the drafting of faulty legislation, so let's hope we can do better second time around.

Commonhold is widely used in other countries around the world. It allows homeowners to own their property on a freehold basis, giving them greater control over the costs of home ownership as blocks are jointly owned and managed. But it isn’t a panacea to all leaseholders’ property woes and comes with its own problems, so we will be watching the next steps towards its widespread adoption with interest.

You can read all the reports and recommendations for leasehold reform on the Law Commission’s website.


Lease Extension, FH and Right to Manage


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