Leaseholders will be given the right to extend their lease by 990 years at zero ground rent, Housing Secretary Robert Jenrick announced.
This will impact 4.5 million people, who will no longer have to pay any ground rents to freeholders.
Escalating leasehold ground rents has been a controversial subject for some time, which means homeowners incur extra costs and may run into difficulties when selling their home.
Miles Robinson, head of mortgages at Trussle, said: “We’ve seen a 56% increase in mortgage applications for flats from 2019 to 2020, and many of these will be leasehold properties.
“We welcome the news today that homeowners in England and Wales will be given further rights, enabling them to extend leases up to 990 years at zero ground rent.
“It’s a significant change which will put a stop to unnecessary charges, and will make owning and selling a home easier and fairer for millions of people.”
Anna Bailey, founder and chief executive of the Leasehold Group, said: “Since 2002, together with my late business partners Alex Greenslade and Louie Burns, we have enabled thousands of owners of leasehold flats to extend their leases or purchase their freeholds and are currently enabling many owners of leasehold houses to purchase their freeholds. Louie Burns, our most vociferous campaigner, would have been encouraged by today’s announcement but he would also have been the first to delve into the detail of the proposals to uncover any potential loopholes where leaseholders might be open to freeholder exploitation.
“Our highly experienced technical team has reviewed the proposals at length and there are certainly several important points to consider in this respect. While we acknowledge that progress has been made by the government’s announcement, we believe that there is a long way to go and that the devil will be in the detail as to whether the outlook for leaseholders will truly be rosy.
“Having been at the forefront of this sector and working solely for leaseholders for nearly 20 years, I am genuinely concerned that the reforms proposed will in reality change very little for ‘millions of leaseholders’ and are nothing more than window dressing. We – and the clients for whom we are working – urgently need more clarification on how, and crucially when, the reforms will actually be implemented.”
Bailey added: “Giving leaseholders the opportunity to extend their lease by 990 years is actually a moot point; a leaseholder already has the right to extend their lease by 90 years and reduce their ground rent to a “peppercorn” (i.e. zero) under existing legislation, and, arguably, there is virtually no difference in the value of a leasehold property with a 990-year lease compared to a 160-year lease.
“It is also important to point out that we believe that the government has missed a ‘quick win’ in moving forward with the proposal to drop the two-year ownership rule that currently exists for owners of leasehold flats wishing to extend their leases (there is no such ownership criteria for freehold purchases of flats, with eligibility from day one).”
Justin Malonson is the Founder of LyfeLoop a 16+ year tech innovator, investigative media researcher and host of the Freedom Not Control Podcast live on Voice America. Justin is a highly sought-after tech entrepreneur, industry speaker and winner of the coveted Business Achievement Awards “Top Digital Marketer” award. With 16+ years of demanding experience, Justin has worked with over 3,000 businesses including amazing clients such as Blue Cross Blue Shield Association, Sotheby’s International Realty, Duke University, White House Black Market,Tiffin Motorhomes, Bass Pro Shops and Beazer Homes USA.