leasehold reform

Report’s demand to make leasehold simpler and cheaper

Leasehold reform proposals could save leaseholders thousands when it comes to extending their lease or buying their property freehold.

Meanwhile, onerous ground rents, which have made some new-build properties unsellable, could be capped.

Those are the proposals from the Law Commission after a long consultation and investigation into the leasehold system.

Ban on new-build leaseholds

Around four million properties in England and Wales are leasehold, which means that the homeowner does not own the land the property stands on. Instead they lease the land from the freeholder or landowner, paying an annual charge known as ground rent.

Leasehold flat owners also must pay regular maintenance charges.

Last year the Government banned the sale of new-build properties as leasehold after revelations that developers were selling the leases on to management companies. Many of those leases included clauses that allowed the ground rent to double annually.

Make enfranchisement more cost-effective

The Law Commission said its intention is to provide a better deal for leaseholders by making enfranchisement easier, quicker and more cost-effective. At the same time, the watchdog said it had to be fair to freeholders who stand to lose millions.

Its report puts forward three alternative schemes for deciding the lease premium while coming up with other options for reform.

Those reforms include making the process simpler and more certain and capping ground rents.

Housing Secretary Robert Jenrick said he would examine the reform proposals before deciding how the Government should respond.