Housing minister signs off first steps towards leasehold overhaul
But the property industry says that, while enabling leaseholders to extend from day one of their ownership, the rest of the reforms are still too far away.
The Government has taken its first step towards overhauling the leasehold system after Housing Minister Matthew Pennycook signed a regulation yesterday removing the requirement for a flat owner to be in situ for two years before being able to extend their lease.
Also, leaseholders of houses will now be able to extend their lease or buy their freehold.
“The work continues to switch on the measures in the Leasehold and Freehold Reform Act,” he said, which in November last year Pennycook would be implemented by the end of this month.
But his optimism is not shared by all within the property industry. Linz Darlington, MD of Lease Extension Specialists Homehold, says: “The Housing Minister has today signed the regulations implementing the first part of the Leasehold and Freehold Reform Act 2024 that affects lease extensions and freehold purchases.
“While this is a welcome development, removing the ownership condition is a drop in the ocean in terms of what is needed from leasehold reform. It is a small change which will benefit a small proportion of leaseholders.
“We estimate that hundreds of thousands of leaseholders are waiting for the more significant changes to the lease extension regime which have been promised to make it “cheaper and easier” for them to extend their leases.
The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024 during the ‘wash up’ prior to the General Election – now eight months ago – but the Government intends to run even more consultations on some of the important provisions.
Further delay
“They don’t intend to run this consultation until the Summer, and this creates a further delay which is unwarranted and unwelcome,” says Darlington.
“For leaseholders waiting for leasehold reform, they have now had successive governments promise reforms which always seem tantalisingly close, but never actually seem to arrive.
“We need the Labour Government to bring forward the consultation and commit to swiftly implementing the legislation.”
Steven, that would be theft. Many people have invested, including pension funds, in freehold ground rents. I recently had to pay over £60,000 for a lease extension; but i wanted to secure my investment. Many lessees are holding off; this could cost them in the long run. The reform will not be as aggressive as first thought. There will end up being sweet spots in terms on the lengths of leases that benefit from legislation change, and those that do not; a well known GR investor told me this week that he expects leases in the 80 to 90 year range will end up costing substantially more to extend after the legislation comes in. We will wait and see, but remember that that the best title is always freehold. Best wishes Guy
Hello Guy , don’t expect my view to be followed , but I do think it would be the right . Investors in Freeholds would loose everything , but to level the playing field for ordinary people who just want a Family Home that was the view in 1976 when I first started in Norman Stanley Parks N10 as a trainee negotiator/auctioneer . Best regards Steve
The Government should just automatically increase all Lease’s to 999 years and zero ground rent , that would bring Flats equal to Houses .
Freeholds were virtually worthless in 1976 on flat conversions when I started selling property in Muswell Hill N10 . Houses always increased in value , but flats with new 99 year leases have cost their homeowners a fortune in extending leases , ground rents and service charges . To me this is daylight robbery on the Home buyers who worked to pay off a 25 year mortgage .