This autumn, there is due to be a new Leasehold Bill introduced which plans to address a number of issues with leasehold property. In January 2023, it was announced that the leasehold system would be abolished completely, but this is no longer going ahead. Instead, reforms will be put in place. These include the following:
A cap of 0.1% will be put on the ground rent of a property.
New rules will be implemented on service charges.
“Marriage value” will be stopped which accounts for a 50% increase in the property’s market value since the extension of a lease and is paid to the freeholder of the property.
Allowing leaseholders to extend their lease as often as they want whilst maintaining zero ground rent for 990 years.
Giving leaseholders the option to buy out the ground rent on the property to avoid having to extend the lease term.
Reforming the process of enfranchisement valuation. This involves calculating the value of a property once the lease has been extended or when buying a freehold collectively with other flat owners within the block.
These changes will give leaseholders less restrictive and burdensome measures and will ultimately save them thousands. The government aims to make buying and selling leasehold property much easier by redressing areas of law that cause concern for leasehold owners such as extending the lease and service charges.
We already saw a change in the law when the government introduced the Leasehold Reform (ground rent) Act 2022 on 30th June 2022. This stopped freeholders of leasehold properties from being able to charge ground rent on new long residential leasehold properties.
This is a positive step towards reforming the leasehold system. We will wait to hear further developments about this new Bill in the coming months.
Will they abolish leasehold?
It is unlikely that leasehold will be abolished altogether as this has already been proposed but the government went back on their decision. New leasehold reforms have been proposed which will hopefully resolve all the common problems that people have with leasehold property.
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