The 7th January 2021 marked the biggest change to British Property Law in nearly 40 years, find out how these changes could affect you! For some leaseholders, these changes could save them thousands, if not tens of thousands of pounds.
The Housing Secretary Robert Jenrick, announced millions of leaseholders would be given the right to extend their lease by a maximum term of 990 years at zero ground rent.
These changes will mean that those who choose to extend a lease on their home will no longer pay any ground rent to the freeholder, enabling those who aspire to fully own their home can.
But what does that mean for you and the property market?
Extending or buying additional time on your leasehold property can make it more attractive to a potential buyer, and you can see your house's value climb and potentially get those offers pouring in, which is good news if you are thinking of getting on the market!
Housing Secretary Rt Hon Robert Jenrick MP said: “We want to reinforce the security home ownership brings...These reforms provide fairness for 4.5 million leaseholders and chart a course to a new system altogether.”
The changes have come into action after a series of debates brought to the attention of the government, over several years, when it emerged some flats and houses had been sold with clauses that meant ground rents would rise dramatically in years to come.
Previously, leaseholders of houses could only extend a lease for 50 years - once, then they would go on to pay a ground rent.
Although, flat owners could do so numerous times with a ‘peppercorn’ rent usually up to 90 years. Often, these barriers could arise problems for both sets of homeowners.
Under the new reforms, both will be able to extend to up to 990 years with a ground rent at zero, and all new retirement properties will be sold without a ground rent.
(As advised by the Law Commission, read more here)
The government is also aiming to ensure a set calculation rate so the process is fairer, cheaper and more transparent, as well as abolishing prohibitive costs like ‘marriage value’.
Plus, more good news, as further measures have been introduced to protect the elderly. As prior measures have outlined the process will also restrict ground rents to zero for new leases to make the process fairer for leaseholders. This will also now apply to retirement leasehold properties (homes built specifically for older people).
This allows purchasers of these homes to have the same rights as fellow homeowners with more security from uncertain practices.
Keep an eye out!
If you are looking to extend your lease the .gov website have also announced an?online calculator will be introduced. The calculator will help you discover how much it will cost to buy the freehold or extend a lease.
What are the main changes?
- Leaseholders will be given the right to extend leases by 990 years, with a ground rent at zero.
- The reforms aim to save homeowners thousands*
- Our elderly community are also protected by reducing ground rents to zero for all new retirement properties
Confused the difference between leasehold and freehold?
The difference in property types can often be confusing. We have a blog that can help you understand, "Jargon busting: Leasehold, freehold and commonhold"
Do you believe these changes will make you feel more secure?
Let us know on our social channels!
More information on the Ministry of Housing, Communities & Local Government here
