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Residential Leasehold Practices

In December 2017 we looked at the then government’s proposals as they related to what it described as ‘unfair and abusive’ leasehold practices. Since then, we have had the Law Commissioners’ Report on Leasehold Home Ownership (July 2020) and more recently, a Governmental press release declaring that it will be made easier and cheaper for long leasehold owners to purchase an extended lease (January 2021). The proposals “mean both house and flat leaseholders will now be able to extend their lease to a new standard 990 years with a ground rent at zero”.

The right to a new lease is particularly important to leasehold owners of flats (where the freehold needs to be purchased by the leasehold owners joining together) but the new lease is presently only available for an additional 90 years. The proposed 990 years was originally put forward by the Law Commission and has been adopted by the Government.

The Government has previously committed to new leases having a ground rent of zero but in the January press release, the Ministry of Housing, Communities and Local Government makes a further commitment to the elderly who will be unlikely to apply to extend their leases. It is stated that zero ground rents “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 are protected from uncertain and rip-off practices”.

The Government has also stated in its press release that the contentious ‘marriage value’ will be abolished and calculation rates for the purchase price will be set out making them fairer, cheaper and more transparent.

The Government has stated that it intends to bring forward the proposed zero ground rent in the next upcoming Parliamentary session as part 1 of a 2 part legislative programme. Other Law Commission recommendations (including commonhold) will be legislated upon in due course.

Legislative change of course takes time and we will have to wait to see if and when these proposals are finally adopted.

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