The Government last week confirmed its intention to reform the leasehold enfranchisement regime and its plans to proceed with pushing a reinvigorated commonhold regime.
A new leasehold extension regime has been discussed for a number of years, most recently last year with the Law Commission making recommendations. The Government has confirmed the recommendations will be taken forward: the law will be changed so a leaseholder entitled to extend their lease, will be able to do so for a period of 999 years paying zero ground rent. The cost for doing so will be more transparent with 'marriage value' abolished. However, these changes will require legislation before they become law.
Acknowledging this will take a period of time to pass through Parliament and then to take effect, what will happen in the meantime? First, communication with residents will be essential to manage expectations about the current legal position - the headlines don't clearly set out the timescales. Second, I expect freeholders may come under pressure from leaseholder's solicitors to agree a position in advance of the changes taking effect, i.e. negotiate a longer lease period on extension. Those freeholders that are charitable will have to be particularly cautious to ensure they are not agreeing to more than they need to and lose potential income.
It will be interesting to see how quickly this, and the other long discussed property reforms, will progress through Parliament. It is definitely a 'watch this space' as the devil will be in the detail.
Government reforms make it easier and cheaper for leaseholders to buy their homes