On 7th January 2021, the Housing Secretary released an announcement regarding leasehold reform which promises to make things easier and cheaper for leaseholders. You can find the announcement here https://www.gov.uk/government/news/government-reforms-make-it-easier-and-cheaper-for-leaseholders-to-buy-their-homes.
The announcement is a commitment by the Government to enact legislation which seeks to:
- Empower leaseholders of both houses and flats to extend their leases to 990 years at a zero ground rent;
- Make changes to the valuation criteria to make it fairer, cheaper and more transparent to extend leases (in particular they suggest that marriage value will be removed from the calculation); and
- Place an increased emphasis on commonhold ownership of blocks of flats (the type of ownership typically seen in much of continental Europe).
The Housing Secretary suggests draft legislation will be put before Parliament in the upcoming session.
We do not know when these changes will ultimately come into effect, what form they will take or whether the changes will apply retrospectively to existing leases or only to new leases granted from the day of enactment of any new legislation.
Until the industry have sight of a draft bill there is little more guidance we can provide. Nevertheless, we will keep a watchful eye on developments and provide updates when further information is available.
In order to decide whether to proceed now or wait to see what any new legislation brings you need to weigh up the benefit of proceeding now (with the certainty of existing legislation) against the risk of delaying (bearing in mind that delaying could see the price you need to pay under the existing legislation increase due to a shortening of the lease) in the hope that the new legislation falls in your favour and saves you a significant amount of money and allows you to extend your lease to 990 years. The risk in waiting is that any reform is not retrospective and/or does not significantly benefit you.
There is no clear date as to when any reform will come into force. It may therefore be quite some time before you will obtain the information you need to decide whether the new legislation will benefit you or not.
The question is therefore a personal one to you. Do you wish to wait or to resolve matters now? That is a decision only you can take and unfortunately, at present, there is little more than the above that we can add to assist you in making that decision.
For further information contact Katy Rushworth at firstname.lastname@example.org or 0191 2454725