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Leasehold reforms: what, when and how explained

7 months ago
Leasehold reforms: what, when and how explained

You may have seen King Charles III officially opening the new session of Parliament in early November. During the pomp and ceremony, the King read out the Government’s main intentions for the 12 months ahead.  

One Bill that they seek to push through to Royal Assent – that’s when proposals become law – is the Leasehold Bill. It’s part of a long-running campaign to give leaseholders a fairer deal. Homeowners and renters have already been contacting us with regards to changes that may lie ahead, so we’ve answered the most commonly asked questions:  

Q. Am I a leaseholder?

A. You’ll most likely be a leaseholder if you pay a managing agent or a landlord ground rent and/or service charges. Many people who own a flat are leaseholders. If you need any clarification, please ask us.  

Q. Are leaseholds being scrapped?

A. In some cases. The Bill states that housebuilders will not be able to build houses and sell them with leaseholds in England and Wales. The recommendation stopped short of banning brand new flats being sold with leaseholds. There are no proposals to cancel existing leasehold arrangements, so if you already own a leasehold property, it will stay that way for the foreseeable future.   

Q. Will there be changes to the number of years a lease can be extended by?

A. Yes, as the Government wants the standard lease extension term increased from 90 years to 990 years for both flats and houses, which will help protect a property’s future value.   

Q. I’ve only had my leasehold property for six months, will the changes affect me?

A. Yes. At present, a leaseholder has to have owned their property for two years to qualify to extend or buy their lease. Under the Bill’s proposals, this timeframe will be scrapped making it easier for all leaseholders to request changes.   

Q. Are ground rents being abolished?

A. In some cases, yes. The Bill proposes that when a lease extension is agreed, the ground rent resets and stays at £0. When it comes to existing ground rents, the Government has announced it is consulting on a cap, which will help leaseholders who are subject to ground rent ‘doubling’.  

Q. I’m a leaseholder in a mixed-tenure, mixed-use building, will I get help?

A. There are proposed changes for leaseholders who find themselves in this situation. It should become easier to buy the property’s freehold or take over its management in buildings where there is a mix of residential dwellings, shops and offices.   

Q. Will it be simpler to extend or buy a lease?

A. The Government does want to simplify the process of buying or extending a lease. One change is setting a maximum time and fee for the provision of information required to sell a leasehold property. If this change is adopted, it may also become cheaper to buy or extend a lease.  

Q. What other leasehold changes are proposed?

A. The Government would like leaseholders with complaints to have better access to a redress scheme. Additionally, they’d like better transparency over leaseholders’ service charges and for the presumption that leaseholders should pay their freeholders’ legal costs when challenging poor practice.  

Q. How soon will we see leasehold changes?

A. The Government will want the Bill to gain Royal Assent before the next General Election, which must happen before January 2025. The process to adopt a Bill into law can be long winded, involving the House of Commons and the House of Lords, and it can pass from one session of Parliament to another. The Bill can also be amended along the way, so there is no guarantee that the proposals outlined will become law.   

Q. I am a leaseholder in Wales, will the Bill affect me?

A. The Welsh Government is pursuing its own set of leasehold reforms, although The Leasehold Reform (Ground Rent) Act 2022 is applicable.  

Q. Will the Bill change the system in Scotland?

A. The Bill will not change anything in Scotland and it has its own approach to property ownership, which is more akin to commonhold.  

If you’re unclear about anything involving a current leasehold arrangement or detailed in the proposed Bill, contact us and we can explain everything in plain English.

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