- Fri 08 Jan 2021
Did you know there have been changes introduced to the Leasehold regulations to protect Leaseholders from high ground rents and extortionate costs to extend their lease?
On 21 December 2017 The Government announced plans to tackle the growing problem of newly built houses being sold as leasehold rather than freehold, and to limit ground rents on newly created lease agreements. Leasehold reform was included to identify ways to make buying a freehold or extending a lease fairer and cheaper.
Under current rules, leaseholders of houses can only extend their lease once for 50 years with a ground rent and leaseholders of flats can extend as often as they wish at a zero ‘peppercorn’ ground rent for 90 years. The changes being introduced by the Government from 7th January 2021 will enable homeowners to extend their leases up to 990 years at zero ground rent.
Housing Minister Robert Jenrick commented:
‘the new laws are being introduced to banish the scandalous pitfalls of leasehold and put fairness back at the heart of the housing system'.
The changes have been warmly welcomed by leaseholders and mean that anyone who chooses to extend their lease on their home will no longer pay any ground rent to the freeholder. A cap will be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder and Leaseholders will also be able to voluntarily agree to a restriction on future development of their property to avoid paying ‘development value’.
To see the full changes, see the government legislation below:Leasehold Reform, Housing and Urban Development Act 1993 (legislation.gov.uk)