Landlords with leasehold properties should be able to enjoy reduced costs and red tape when they wish to extend their leases, the government claims.
The new measures to be introduced by the government later this year include one meaning owners of leasehold houses will be able to extend their leaseholds by 990 years at a zero ground rent, stopping bids by freeholders and developers to sell properties with ‘rip off’ rapidly accelerating ground rents, and limiting extensions to 50 years.
Ministers are also to make it fairer and cheaper to extend leases or convert them to freehold or the little-used Commonhold status, including capping ground rent costs, and scrapping the notion of so-called ‘marriage value’ that often costs landlords tens of thousands of pounds when extending a lease.
There will also be a special provision to prevent leasehold abuse as applied to retirement properties.
Mark Hayward, Propertymark’s chief policy adviser, says: “We have campaigned for years for changes to the leasehold system and event fees on retirement homes. The issue of escalating ground rent on leasehold homes has been a long term scandal which has left many owners trapped and unable to sell their houses.
“Our research in 2018 found that 46 per cent of leasehold house owners were unaware of the escalating ground rent when they purchased their property.
“Over one million households in the UK are sold through a leasehold, and this new legislation will go a long way to help thousands of homeowners caught in a leasehold trap.
"However, while we welcome the government’s initiative to reduce ground rents to zero for all new retirement properties, we would argue this needs to be extended to all retirement properties to create a level playing field. Event fees remain a hugely contentious issue which many consumers still don’t understand so we need as much clarity and transparency as possible.”
And housing minister Robert Jenrick says: “Across the country people are struggling to realise the dream of owning their own home but find the reality of being a leaseholder far too bureaucratic, burdensome and expensive.
“We want to reinforce the security that home ownership brings by changing forever the way we own homes and end some of the worst practices faced by homeowners.
"These reforms provide fairness for 4.5 million leaseholders and chart a course to a new system altogether.”