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Plans have been unveiled by Ministers to eliminate the leasehold system in England and Wales. The proposed changes would prohibit the sale of new leasehold flats. Currently, under the leasehold system, third-party landlords known as freeholders own the building, and a leaseholder purchases the right to occupy a flat within it for a fixed time period. The government aims to transition to a more globally aligned approach to building homes, known as commonhold, where homeowners have ownership and control over the buildings they reside in. However, freeholders argue that leasehold is the most effective method for managing large complex apartment buildings.
A white paper released on Monday outlines the government’s intention to ban the sale of new leasehold flats and revitalize commonhold with a new legal framework. A draft Leasehold and Commonhold Reform Bill, detailing the workings of the proposed new system, will be published later this year. The new legislation would affect around five million leasehold homes in England and Wales. Housing Minister Matthew Pennycook expressed that these reforms are aimed at putting an end to unfair practices and unreasonable costs imposed by landlords on leaseholders. Numerous individuals have contacted the BBC to report issues with service charges in leasehold blocks.
Kasia Tarker, a flat owner in Southall, West London, has seen her service charge bills soar from around £65 per month in 2022 to over £200 per month this year. She expressed feeling overwhelmed and unable to afford the charges. Another leaseholder, Jean Hopkin, saw the service charge for her three-bedroom flat in Sheffield rise by 356% in four years, making her property unsellable due to the exorbitant charges. Jenny Baker in Southampton is encountering challenges in finding buyers due to unjustified service charges that have escalated to £7,200 annually. These examples highlight the struggles faced by leaseholders in managing escalating costs.
The National Leasehold Campaign (NLC) welcomed the proposed changes, considering them a significant step forward. NLC founder Katie Kendrick emphasized the importance of not forgetting those currently residing in leasehold buildings and stressed the need for mechanisms to aid existing leaseholders trapped in the inequitable leasehold system. Minister Pennycook reiterated the government’s commitment to implementing reforms to assist the millions of leaseholders currently facing difficulties
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