New Leasehold & Freehold Reforms UK
In this article we will highlight the new Bill proposal by the government to redefine current Leasehold and Freehold laws. In a groundbreaking move towards homeownership and as announced in the King’s Speech recently, the UK government plans for a new Bill to be introduced to reform Leasehold. The new approach promises to make homeownership better by making it cheaper and easier for more leaseholders to extend their lease, buy their freehold, and take over management of their building. The King’s Speech also mentioned this approach will help tackle the “exploitation of millions of homeowners through punitive service charges”.
The Leasehold and Freehold Reform Bill 2023-2024 was introduced to the House of Commons on the 27th of November 2023 and underwent a second reading on the 11th of December 2023 . The bill is currently at the Committee stage which is scheduled to require two sittings on the 16th and 18th of January 2024
Here are some of the new proposed key changes:-
1. Lease Extension Liberation:
- Proposal: Increase standard lease extensions up to 990 years with zero ground rent, upon payment of a premium
- Impact: This will provide unparalleled security and flexibility for homeowners, by securing a fixed cost and eliminating the burden of escalating ground rent costs.
2. Ground Rent Abolition:
- Proposal: Eliminating ground rent for new leasehold properties.
- Impact: Provides security for homeowners by eliminating unpredictability and increasing ground rent expenses, fostering financial stability.
3. Ban on New Leaseholds for Houses:
- Proposal: Prohibition of new leaseholds on houses.
- Impact: This will ensure transparency, cancelling out any controversial practices associated with house leaseholds.
4. Commonhold Ownership Promotion:
- Proposal: Promoting commonhold ownership as an alternative model.
- Impact: Grants residents greater control over their properties, fostering a sense of community and reducing dependency on traditional leasehold structures.
5. Timeline and Transition:
- Implementation: The proposed reforms are expected to be implemented in the coming years.
- Impact: Existing leaseholders may experience a more secure and transparent environment, while new buyers will benefit from the reformed system from the outset.
6. Public Response:
- Reaction: Homeowners, advocacy groups, and experts have generally welcomed the proposed changes.
- Impact: Positive reception indicates a shift towards a fairer and more empowering homeownership experience.
7. Legal Implications and Considerations:
- Legal Insight: The reforms may have implications on existing lease agreements and legal processes.
- Impact: Homebuyers can anticipate a more straightforward legal landscape, enhancing their confidence in property transactions.
Given the complexity of the proposed changes, the bill has not been passed yet. Hence, we strongly encourage readers and leaseholders to stay informed by following the news and exercise patience as we await the Royal Assent for the new leasehold reforms in the UK. Stay tuned by following our social media handles for further updates.