New rights for leaseholders - but when?

Millions of leaseholders will have a new right to extend their lease by up to 990 years at zero ground rent, government has announced. 

The change will apply to both house and flat leaseholders, and was described as a “fabulous first step” towards resolving the complex issues around leasehold.

Campaigners have been arguing for reform for a long time. Though the announcement was welcomed, there is concern that there will be continued delays before the necessary legislation is passed. 

The changes represent the most significant reforms to'¯English property law for 40 years and follow recommendations from the Law Commission. 

Under the law as it currently stands, leaseholders'¯of houses'¯can only extend their lease once for 50 years with a ground rent, whereas flat leaseholders can extend as often as they wish at a zero ‘peppercorn’ ground rent'¯for 90 years.

Government said the changes could save some leaseholders “thousands, to tens of thousands of pounds”

Housing Secretary Robert Jenrick said: “We want to reinforce the security that home ownership brings by changing forever the way we own homes and end some of the worst practices faced by homeowners. 

“These reforms provide fairness for 4.5 million leaseholders and chart a course to a new system altogether.”

A commonhold council is also being set up, which government said will “prepare homeowners and the market for the widespread take-up of commonhold” and help “reinvigorate” commonhold.

Professor Nick Hopkins, commissioner for property law at the Law Commission, said: “We are pleased to see government taking its first decisive step towards the implementation of the Law Commission’s recommendations to make enfranchisement cheaper and simpler.”

Further measures announced include reducing ground rents to zero for all new retirement properties, to protect the elderly from uncertain and rip-off practices.

There will also be a cap on the amount of ground rent payable when a leaseholder chooses to extend their lease or become the freeholder; and prohibitive costs such as ‘marriage value’ will be abolished. 

Beth Rudolf, the Conveyancing Association's (CA) director of delivery, said: “The CA is, and has been, very supportive of the Law Commission reports published last year on leasehold enfranchisement, commonhold and right to manage. 

“However, we have been concerned to see what the plans for the legislative agenda in these areas are, as there have been literally scores of similar announcements made which were designed to introduce fairness into leasehold but so far no legislation has been forthcoming. 

“Without legislation, the issues which currently blight leasehold properties and make owners of leasehold property regret they bought them, and the misbehaviour of lease administrators, will continue.“

"The announcements... are a fabulous first step towards resolving those issues and we look forward to hearing the Ministry’s plans and timetable to introduce the required legislation.” 

Government acknowledged that it has yet to respond to the outstanding recommendations from the Law Commission, including in relation to commonhold, but said it will do "in due course".