The UK government is set to include a bill phasing out some leaseholds in England and Wales in the King’s Speech. Housing minister Rachel MacLean confirmed that the controversial leasehold system would be changed, which has imposed expensive fees on homeowners. While the bill is expected to ban leaseholds for new houses, new flats are expected to remain unaffected. According to the housing department, of the nearly 5 million leasehold homes in England, 70% of them are flats. The sale of new-build houses as leaseholds has dropped from 15% in 2016 to 1% by December 2022.
Ms MacLean said that the new bill would “restore true home ownership to millions of people and end the reign of rip off freeholders + incompetent profiteering management companies.” She did not provide additional details but shared an article from Sunday Times, which said that following a consultation, the government would cap all existing ground rents at a very low rate, known as a “peppercorn” rate. Ground rents for properties sold after June 2022 have already been capped. The Sunday Times also noted that the government would change the standard contract lease extension period from 90 years to 990 years.
Leasehold homes are granted a lease for a fixed period, which can be expanded or homeowners may buy the freehold, but the process is often lengthy and expensive. Labour’s shadow housing minister Matthew Pennycook dismissed the plans, saying, “If this thin gruel is all we’re getting in the King’s Speech, leaseholders will have been failed.” He added that Labour would “fundamentally and comprehensively reform the leasehold system.”
Housing campaigner Harry Scoffin called for the ban on leaseholds to be extended to include flats, and while he called the abolition of existing ground rents a “radical” plan, he said it would not do enough to “liberate flat leaseholders.” The new legislation is expected to make it easier and less expensive for homeowners to extend their lease or buy a freehold. However, making changes to the property market can be difficult, and the bill could face a challenging journey before becoming law
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