At the beginning of this year, plans to abolish the ‘feudal’ leasehold system were announced by Michael Gove, the Secretary of State at the Department for Levelling Up, Housing and Communities. He said:
“We hope, in the forthcoming King’s Speech, to introduce legislation to fundamentally reform the system. Leaseholders, not just in this case but in so many other cases, are held to ransom by freeholders. We need to end this feudal form of tenure and ensure individuals have the right to enjoy their own property fully.”
It is not surprising that the announcement was widely reported in the press and on social media.
Plans to change, NOT abolish
Reports published by the Guardian and the BBC over the last week however suggest that leasehold reform will be brought forward in the autumn “with a view to changing the system in England and Wales before the next election”.
Changing the system is a far cry from abolishing the system.
What are the proposed changes to leaseholds?
The proposed leasehold reforms announced by the government in January 2021 were to:
- Extend leases by a maximum term of 990 years at peppercorn rent
- Abolish marriage value
- Introduce an online calculator and set the calculation rates to ensure valuations are fairer, cheaper, and more transparent
- Set up the Commonhold Council to reinvigorate commonhold
Dona Awano, a solicitor in our leasehold team discussed these reforms on a panel on Money Box Live when the announcement was made in January 2021. Dona explained on the radio show that the reforms are intended to streamline the lease extension process and that they ought to result in savings on professional costs. One of the major proposed changes is that leaseholders with short leases below 80 years would no longer have to pay the 50% proportion of the marriage value to the landlord.
It is however uncertain when the legislation will be introduced so whilst leaseholders with long leases might consider it worth waiting a few years, leaseholders with short leases may have no choice but to extend their leases as their position is precarious.
What has happened so far?
Last year, the Leasehold Reform (Ground Rent) Act 2022 came into effect. This meant that any new lease granted on or after 30 June 2022 would no longer be permitted to have a ground rent. However, this reform only removed ground rent from new leases and not on any existing leases.
Current leaseholders, particularly leaseholders of flats with short leases or those selling their properties have been asking their advisers whether to put off selling or extending their leases, pending the roll out of the reforms promised by government.
Whist we wait for more information on the proposed reforms to be brought forward in the leasehold reform bill, what should leaseholders, particularly those with short leases or those selling, do?
Dona Awano, a leasehold solicitor and member of the Law Society’s Conveyancing and Land Law Committee says; “It is likely that there is still a long way to go before we see any tangible change and leaseholders trying to decide what to do should speak to a leasehold specialist for advice. A solicitor will be able to help you explore all options and recommend the best way to proceed in your situation.”
About our Leasehold team
Based in our Crystal Palace office, our Leasehold solicitors are all highly experienced in this niche area of Property law. Amphlett Lissimore are also members of the Association of Leasehold Enfranchisement Practitioners (ALEP), so you can be sure to receive a high level of service, integrity, and professionalism from us.