In January 2021, the government announced significant changes to English property law, designed to make home ownership fairer and less bureaucratic. The UK has long operated a property system where buyers can either purchase a home which is freehold or leasehold. With freehold properties, the buyer will own both the property as well as the land it stands upon. However, leasehold properties enable the buyer to own the property, but not the ground beneath. Instead, they pay a ground rent to the freeholder which can be extremely costly when combined with the cost of monthly mortgage payments too.
There are around 4.5 million leasehold properties located throughout England and Wales, and the majority of these are flats. Leases for these homes come with an expiry date on them, which will typically be around 99 to 125 years. This might seem ridiculously long but be warned that anything less than 80 years is considered a short lease.
Our residential lease extension solicitor team explains Housing Secretary Robert Jenrick’s recent announcement. Leaseholders now have the right to extend their lease up to 990 years and pay zero ground rent. If you choose to follow this lease extension legal advice, then this could save you tens of thousands in future ground rent that you will not be required to pay. Previously, leaseholders of houses have only been able to extend their lease once up to a period of 50 years, with leaseholders of flats able to extend up to 90 years as often as they wish.
The previous rules have enabled freeholders to raise their ground rent at any time, with little or zero benefit to the leaseholder. However, this system will now be abolished, and a cap has been introduced so that freeholders are unable to charge ground rent above a certain threshold. The amount payable will be transparent and revealed via an online calculation tool so that leaseholders can easily find out how much they owe, as well as how much it would cost to buy or extend their lease.
The elderly are also catered for in this lease extension reform. Retirement leasehold properties will have their ground rents lowered to zero for new leases to avoid rip-off practices taking place and affecting a vulnerable generation.
Whether you are interested in buying a leasehold property with a shorter length of lease, or you are an existing homeowner who needs to speak to our lease advice lease extension specialists, then help is at hand. Our team is delighted to offer guidance on all aspects of lease law and navigate through the complexities of your individual lease contract.
Unfortunately, it is not yet known when the residential lease extension changes will come into effect and the reality is that the reform may still be a few years away. However, a residential lease solicitor will be able to advise on whether you should wait to extend or proceed now. For further information, please contact Hook & Partners today on 01268 692 255 or email firstname.lastname@example.org.