The government consultation period on potential leasehold reform closed in January, with the resulting consultation paper (opens in new tab) outlining the changes to the leasehold system that could eventually be recommended and passed in Parliament.
The much welcomed move to crack down on abusive leasehold practices comes in response to a growing concern among homeowners about ground rents, the difficulties of enfranchisement (or purchasing the freehold of a property), and lease extensions.
New builds in particular have come under the spotlight in recent years due to exorbitant ground rent clauses in some contracts, which allowed for ground rent to double every 10 years, essentially trapping some homeowners in unsaleable properties. Despite the government's proposals to ban leaseholds on all new builds back in 2017, they are still being sold, with Land Registry figures pointing to over 26,000 new build sales on a leasehold basis in 2018.
However, owners of new builds are not the only group of leasehold homeowners deeply concerned about the terms of their leases; homeowners have repeatedly pointed out unfair conditions to their leases, including excessive charges, and difficulties faced when extending the lease or trying to obtain the freehold.
Lease extensions can cost home owners tens of thousands of pounds, and buying the freehold is especially difficult for owners of flats, who need to join together with other leaseholders in a collective legal action.
The proposed reform would strengthen leaseholders' rights in these processes, and tackle excessive lease extension charges. It is important to note that the essential mechanisms of enfranchisement would not change, only the ease and speed of the process.
While the proactive approach to solving leaseholders' woes is welcome, it remains unclear when, if at all, such changes may be enshrined in law, and with the ongoing uncertainty around Brexit, a Leasehold Reform in 2019 is looking highly unlikely.
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