Millions of leaseholders will be given the right to extend their lease by a maximum term of 990 years at zero ground rent as part of the Government’s ambitious leasehold reform agenda.
Last week the Housing Secretary Robert Jenrick announced the most significant set of reforms to how we hold property for at least 40 years, promising further fundamental change to English property law through the widespread introduction of the Commonhold tenure.
Legislation will be brought forward in the upcoming session of Parliament, to set future ground rents to zero. The government has previously committed to restricting ground rents to zero for new leases to make the process fairer for leaseholders. However, further measures will be introduced to protect the elderly, with zero ground rent applying to retirement leasehold properties (homes built specifically for older people) as well. As such, purchasers of these homes have the same rights as other homeowners and are protected from uncertain and rip-off practices.
Under current rules, leaseholders of houses can only extend their lease once at a ‘modern ground rent’ for 50 years, whereas leaseholders of flats can extend as often as they wish at a zero ‘peppercorn’ ground rent for 90 years. The changes announced by the Housing Secretary 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.
Moreover, the government is abolishing prohibitive costs like ‘marriage value’ and set the calculation rates to increase fairness and transparency. In order to avoid paying ‘development value’, leaseholders will be able to voluntarily agree restrictions to future development of their property.
The changes have been welcomed by North Swindon MP Justin Tomlinson, who throughout his 20 years as an elected representative in Swindon has supported efforts to secure leasehold reform, served on the All-Party Parliamentary Group for Leasehold Reform, raised the issue in the House of Commons, and organised public meetings on the issue.
Justin Tomlinson said: “As an MP and local councillor, I have been contacted by many residents who have highlighted the issues they have faced with unfair leasehold practices – with many not getting value for money, or seeing their ground rent increase very sharply.
“I am delighted that the Government is setting out measures to tackle this problem and is working to ensure fairness and transparency for homeowners, thereby protecting them from abuse and poor service.”
