The government have announced reforms, which could signal the biggest change in property law for 40 years and help benefit millions of leaseholders to the tune of tens of thousands of pounds in relation to their property.
Housing Secretary Robert Jenrick presented the news on the 7th January, which sees a national move towards commonhold and will give leaseholders the right to extend their lease by a maximum term of 990 years at zero ground rent.
Under the current law, leaseholders can face high ground rates, putting additional financial strain on families and making them feel they are paying rent on a property they own.
It can also impact the attractiveness of the property for future sale, not only by increasing the length of time and costs in buying and selling - but as lease terms reduce, mortgages can prove difficult to secure on such properties, making people feel trapped into staying where they are or forcing them into negotiating with cash buyers.
The reforms will now mean any leaseholder (house or flat) can extend their lease without having to pay any ground rent to the freeholder - which could save them thousands of pounds and give them more security in owning their own home. Leaseholders can also face high charges and barriers when looking to extend their lease - these measures are looking to reduce obstacles and make it less complicated. An online calculator will be introduced to help make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease, therefore reducing negotiations between parties.
Changes are also proposed to help protect older leaseholders living in retirement properties - giving them these same rights as other homeowners.
Additional costs such as 'marriage value' are also to be removed under these reforms and leaseholders will also be able to avoid paying 'development value' by voluntarily agreeing to a restriction on the future development of their property.
This legislation is proposed for the upcoming session of parliament, with further reform also expected to move more property ownership towards commonhold.
Commonhold is an alternative system to leasehold, allowing you to own the freehold of a property - but unlike leasehold, there is no limit on how long you can own the property for, giving people more control over the costs of home-ownership. The rest of the building or estate which forms the commonhold is owned and managed jointly by the property owners through a commonhold association.
Therefore as part of these reforms 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.
Commenting on the news, Fosters' Head of Residential Property Rebecca Laws said: "These reforms certainly signal hope for some leaseholders who have experienced difficulties, financial implications and bureaucracy in respect of extending their lease or selling their property.
"We look forward to seeing more information about these developments and how they might assist our clients in the future. We have valuable experience in helping support people in this particular area of property law and we'd certainly welcome the opportunity to talk to you if you'd like advice in negotiating a lease, or understanding what purchasing a leasehold property could involve for you."
For more information regarding these developments please visit gov.uk - and if you'd like to speak to one of our property team to discuss your situation please call us on 01603 620508 or please complete our online enquiry form.