Leasehold Reform Proposals

[Jeffrey Shaw]

Yes, as per my preceding post.

But I've also submitted a suggestion in response that what's most needed is to consolidate/rewrite the  > 100 Acts of Parliament on the topic of L&T.

[topflat29]

Latest news at 14 March 2022 :

 

https://commonslibrary.parliament.uk/leasehold-reform-in-england-and-wales/

 

Future legislation will:

• Reform the process of enfranchisement valuation used to calculate the cost of extending a lease or buying the freehold.
• Abolish marriage value.
• Cap the treatment of ground rents at 0.1% of the freehold value and prescribe rates for the calculations at market value. An online calculator will simplify and standardise the process of enfranchisement.
• Keep existing discounts for improvements made by leaseholders and security of tenure.
• Introduce a separate valuation method for low-value properties.
• Give leaseholders of flats and houses the same right to extend their lease agreements “as often as they wish, at zero ground rent, for a term of 990 years”.
• Allow for redevelopment breaks during the last 12 months of the original lease, or the last five years of each period of 90 years of the extension to continue, “subject to existing safeguards and compensation”.
• Enable leaseholders, where they already have a long lease, to buy out the ground rent without having to extend the lease term.

[Jeffrey Shaw]

All useful stuff; thank you. Let's see if any of it ever comes to be implemented and when.

[topflat29]

The Leasehold Reform ( Ground Rent) Act 2022  was granted Royal Assent on 22 Feb  2022 ? and should become law within 6 months.

 

The wording of the Act is difficult to follow and it may be easier to understand the explanatory notes  ( which are not part of the bill ) .  see  website  below  :

 

https://publications.parliament.uk/pa/bills/cbill/58-02/0164/en/210164enlp.pdf

 

Item 1 states :  Through this Bill the Government aims to make leasehold ownership fairer and more affordable for
leaseholders by ensuring that freeholders/landlords will no longer be able to make financial demands for ground rent.

 

Item 2 states : This Bill seeks to achieve the above by restricting  ground rents on newly established leases of  houses and flats to a token one peppercorn per  year, effectively restricting ground rents to zero  financial value.

 

Item 18 states : For qualifying tenants of flats, the Leasehold  Reform, Housing and Urban Development Act  1993 sets out the right to a new lease for the remainder of the existing term plus a further 90  years, commonly referred to as a lease extension.    A premium is payable, but the new lease must  contain a peppercorn ground rent.

 

Question : This Act applies to new leases only   Can the existing lease be legally  extended without becoming a new lease.?

[topflat29]

It seems that ground rent for an existing lease can  continue  to  be demanded  to the  end of  the  lease period.    But  beyond   expiry date , the lease  agreement,  if continued,  must  be  under a  peppercorn ground rent.

 

So my question is withdrawn.

[topflat29]

1. The regulated lease is defined in the Act as one which meets all the following conditions:

 

A Regulated Lease must be a long lease of a single dwelling.

 

At its simplest this means long leases and not tenancies.

 

2. A prohibited rent is one that exceeds the permitted rent.

 

The general rule for a permitted rent is a peppercorn rent which means an annual rent of one peppercorn, having no financial value.

 

3. A Regulated Lease includes a lease granted by virtue of a variation which gives rise to a deemed surrender and regrant. This is the case even if no premium is payable for the variation.

 

4. A variation of a lease which affects the term or alters the demise is, by operation of law, a deemed surrender and regrant. How the deed is named is immaterial. We often see ‘deeds of variation which seek to change the term of the lease or demise granted, but these are in fact deeds of surrender and regrant and so, for the purposes of the Act, would be Regulated Leases caught by the Act. These could however, also be replacement leases (see section below).

 

Copied from : www.irwinmitchell.com/news-and-insights/newsandmedia/2022/february/understanding-the-leasehold-reform-act-2022

[topflat29]

From 30 June 2022, anyone buying a home on a new long lease will now be freed from these annual costs, helping homeowners manage their bills as they face cost of living increases.

 

Landlords will be banned from charging ground rent to future leaseholders, under a new law that will lead to fairer, more transparent homeownership for thousands of homebuyers, helping to level up opportunities for more people.

 

In preparation, many landlords have already reduced ground rent to zero for home buyers starting a new lease with them. Anyone preparing to sign a new lease on a home in the next two months should speak to their landlord to ensure their ground rent rate reflects the upcoming changes.

 

https://www.gov.uk/government/news/future-homebuyers-to-be-freed-from-expensive-ground-rent-bills-on-30-june

[Jeffrey Shaw]

The main thing is that none of these changes will be retroactive. All existing leases will be wholly unaffected.