What?

New legislation enables house and flat leaseholders the right to extend their leases by 990 years with a ground rent of zero. The system will be easier and cheaper than previous methods and eliminates the ‘Marriage Value’ method for those looking to purchase the freehold of their property too.

Why?

Leaseholders previously were subject to increases in ground rent and had no control over the running of the building. To become a freeholder or extend the lease they’d pay a hefty sum to the landlord determined by the uplift in value the property would achieve with an extended lease.

How?

A Commonhold council is to be formed of leaseholders, government officials and property industry professionals to prepare for the transition to Commonhold as homeowners and the market take up this new initiative.

To facilitate it the Government will introduce an online calculator to make it easy to determine the cost of either extending or buying a freehold.

A cap will also be introduced on ground rent payable when a leaseholder chooses to extend or become a freeholder.

In addition, new leases for retirement leasehold properties will have ground rents restricted to zero.

Leaseholders will also be able to voluntarily agree to a restriction on the future development of their property to avoid paying ‘development value’. 

When?

The first part of reform legislation, to set future ground rents to zero, will be brought forward in the upcoming session of Parliament. The second regarding the Law Commission recommendations, including Commonhold, will follow.