The leasehold system in England and Wales is set to undergo major reform with the introduction of a bill by the Housing Secretary, Michael Gove. Gove stated that he is confident the bill will pass by the next general election, and it would make it easier and more affordable for homeowners to extend their leases or buy their freehold. The bill would ban new leases for houses but allows flats to continue. Currently, leaseholders have to pay ground rent and expensive maintenance charges as they only own the lease, which gives them the right to use the property, but not the land it is built on.
The long-expected legislation has been met with support from campaigners; however, some expressed disappointment that new leaseholds for flats were not included in the ban. England has an estimated five million leasehold homes, 70% of which are flats, with new-build houses sold as leaseholds currently amounting to only 1% compared to a high of 15% in 2016. Gove affirmed his commitment to phasing out leaseholds entirely, stating that the current system is “outdated.”
The government plans to make other changes such as extending the standard lease extension to 990 years, making it easier and cheaper for leaseholders to take control of the properties’ management, and providing transparency over service charges. The government is also consulting on options to cap ground rents for existing leases, which are paid on top of mortgages and can be relatively high and unpredictable, making homes difficult to sell.
Founder of the National Leasehold Campaign, Katie Kendrick welcomed the legislation, calling it a “long-overdue” moment. Some Conservative MPs could attempt to amend the bill to abolish new leaseholds for flats, and Labour has said it would back such moves. They call for commonhold to be the default tenure for all new properties, with changes so that existing leaseholders can collectively purchase more easily and move to commonhold if desired
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