If you are a Leaseholder, this article is a must-read as the Leasehold Reform Act becomes law 📖
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24th May 2024 - The Leasehold and Freehold Reform Act becomes law ⚖️
🔹 Reforms to leasehold and freehold in England and Wales have become law – but without a promised cap on ground rents
🔹 The new law aims to make it cheaper and easier for more people to extend their lease, buy their freehold and take over management of their building
Bullet-point summary of changes
✅ Increase standard lease extension terms to 990 years for houses and flats
✅ Provide greater transparency over service charges
✅ The Act will also remove barriers for leaseholders to challenge their landlords’ unreasonable charges at Tribunal
✅ Sale of new leasehold houses will be banned
✅ End excessive buildings insurance commissions for freeholders and managing agents
✅ Requirement for a new leaseholder to have owned their property for two years before they can buy or extend their lease is scrapped
✅ 'Marriage value' scrapped too (where a Freeholder was able to charge Leaseholder for extending leases below 80 years)
✅ Which means, short lease properties sub 80 years will hold their value better
✅ The Act will also help more leaseholders take over the management of their property
✅ Leaseholders in some buildings are barred from taking over the management of the site or buying its freehold if more than 25% of its floor space is commercial – such as shops or offices on the ground floor
✅ But this limit will now be increased to 50% to enable more homeowners to access Right to Manage or the right to a collective enfranchisement
But plans to remove ground rent for existing leaseholders or cap it at £250 have been dropped ❌
🔸 Levelling Up Secretary Michael Gove – who has announced he is standing down as an MP at the election – had originally wanted to cap ground rents at nominal level
🔸 That was changed to a planned £250 cap - but the idea was dropped altogether as the legislation was rushed into law at the last minute
🔸 A ground rent is paid by owners of leasehold properties on top of their mortgage, with some facing high charges and unexpected increases which can make homes difficult to sell
Why the U-turn on capping Ground Rents?
The owners of freehold properties had campaigned hard against the ground rent cap and other measures in the bill arguing it would harm the value of their investments and some companies have threatened to sue the government for interfering with their property rights.
If Labour are voted in...
Labour's shadow housing minister Matthew Pennycook said his party would “finish the job of finally bringing the archaic and iniquitous leasehold system to an end”. “Having waited so long and had their expectations raised so high, leaseholders across the country will be bitterly disappointed at the Tories’ failure to enact bold leasehold reform,” he added.
More comment and analysis
Speaking as the leasehold bill was being rushed through the House of Lords on Friday, Tory peer Lord Bailey of Paddington said: "This bill is suboptimal, it's not the revolution that many leaseholders across the country have been desperate for. "But it's the only game in town, a game that has currently taken 22 years to get to this point."
Other Tory peers accused the government of "rushing through" the legislation.
📩 For more information, read the full article from BBC here 📩
📩 Gov.uk news article here 📩
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