Government reforms make it easier and cheaper for leaseholders to buy their homes
8 January 2021 by Leon Pascal
Legislation will be brought forward in the upcoming session of Parliament to ensure that millions of leaseholders will be given the right to extend their lease by a maximum term of 990 years at zero ground rent, the Housing Secretary Robert Jenrick has announced.
What are the current rules?
Under current rules, leaseholders of flats can extend their lease at a zero ‘peppercorn’ ground rent, but usually only for 90 years. Leaseholders can also face high charges to extend their lease. For leasehold house owners, which face slightly different rules, they can also face barriers when they look to extend their leases.
What do the changes mean?
The changes 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.
A cap will also be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder. An online calculator will be introduced to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.
The government is abolishing prohibitive costs like ‘marriage value’ and set the calculation rates to ensure this is fairer, cheaper, and more transparent.
Further measures will be introduced to protect the elderly.
The government has previously committed to restricting ground rents to zero for new leases to make the process fairer for leaseholders. This 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 practices.
Leaseholders will also be able to voluntarily agree to a restriction on future development of their property to avoid paying ‘development value’.
Whether you are a leaseholder looking to extend your lease or the freeholder of a building subject to long residential leases, Fisher Jones Greenwood Solicitors can assist – simply contact Leon Pascal or Sarah Shea, please contact us on 01206 700113 or email [email protected] for a no-obligation initial consultation.
Source: www.gov.uk