The Government will reform leasehold tenure and make buying/extending leases “easier, faster, fairer and cheaper”. Around 4.5 million people could benefit from the planned reform of legislation which will give the right to extend leases to 990 years and pay a peppercorn (token) ground rent. In addition, extending a lease or buying a freehold will become much more straightforward and affordable.
What is a leasehold?
This is where you own the property, but not the land it sits on. The land is owned by a freeholder (this might be a management company or an individual) and you generally pay them ‘ground rent’ every year. Historically, this mainly applied to flats, but it is sometimes also relevant to new and retirement properties.
Why is reform necessary?
Under the current law many people face high ground rents which, when combined with a mortgage, can make it feel like they are paying rent on a property they own.
Then we come to the length of the lease. It’s not generally advisable to buy a property with a lease of less than 90 years and as the number of years left on the lease decreases further, so your property potentially becomes more difficult to sell. There is an option to extend the lease, but this process is often complicated and expensive. Depending on the value of the property, it can currently cost leaseholders thousands of pounds.
Is there a catch?
Adjoa Djan-Krofa, Principal Solicitor at Pishon Gold, said: “These reforms are long overdue and very welcome. As is so often the case, the devil is in the detail.” The government currently busy with Brexit and the Covid-19 pandemic it is unclear when the changes will actually be implemented.
“All of which leaves leaseholders, landlords, and their respective advisers in leasehold limbo right now.”
The good news is that Pishon Gold has been helping families and individuals with their legal issues – including lease extensions – since 2012 and has a growing army of very happy local customers. If you would like to be better informed about how these changes might affect you and the best course of action for your situation, then please get in touch