Reforms make it easier for leaseholders to buy their homes

Reforms make it easier for leaseholders to buy their homes
Millions of leaseholders, many of whom are currently stuck paying high ground rents, will be given the right to extend their leases by up to 990 years under new government reforms.

The Housing Secretary Robert Jenrick said the changes would mean that any leaseholder who chooses to extend the lease on their property will no longer pay any ground rent to the freeholder.

Under current rules, freeholders are able to raise ground rents even if leaseholders won’t see any benefit, and leasehold house owners are only able to extend their leases by a maximum of 50 years. Leaseholders of flats can extend as often as they want to at a zero ‘peppercorn’ ground rent for 90 years.

The reforms mean that 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. This will also now apply to retirement leasehold properties, where homes have been built specifically for older people.

“Across the country people are struggling to realise the dream of owning their own home but find the reality of being a leaseholder far too bureaucratic, burdensome and expensive,” said Mr Jenrick. “We want to reinforce the security that home ownership brings by changing forever the way we own homes and end some of the worst practices faced by homeowners. These reforms provide fairness for 4.5 million leaseholders and chart a course to a new system altogether.”

Other changes

Costs such as “marriage value” will be abolished by the reforms, and standard calculation rates will be introduced to ensure that charges for leaseholders wanting to extend their leases are fair. Marriage value essentially represents the increase in the value of the property once the lease has been extended or the freehold purchased by the leaseholder. The government’s announcement will remove this from the premium calculation, helping to reduce leaseholder costs.

The government has also said it will introduce an online calculator to make it easier for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.

Plans for ‘commonhold’ housing, which involves leaseholders being jointly given full ownership and management of their buildings, will press ahead. A Commonhold Council consisting of leasehold groups, industry and government, is being set up to prepare homeowners and the market for the widespread take-up of commonhold.
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