Update on leasehold reform and ground rents

The Act provides that ground rent cannot be demanded in respect of any new long residential lease and landlords cannot charge administration fees for collecting a peppercorn rent.

Mullis & Peake LLP are members of ALEP (Association of Leasehold Enfranchisement Practitioners) who are liaising closely with the government regarding further reforms and who have been advised by Lord Greenhalgh that The Ground Rent Act is the first part of the government’s major two-part leasehold reform within this Parliament.

The next stage is to build on the Act and provides additional support for leaseholders to make home ownership cheaper, fairer and more secure.

They intend to reform the process of valuation and to abolish marriage value.  Instead, they are looking to introduce prescribed rates for the calculations at market value as well as introducing an online calculator to both simplify the process and ensure standardisation for all those looking to enfranchise. It is hoped that the changes will make the valuation process easier and that they will result in substantial savings for some leaseholders, particularly those with less than 80 years of the lease term remaining on the lease.

In addition, the length of a statutory lease extension is to increase to 990 years, from 90 years (for flats) and 50 years (for houses).  Leaseholders will be able to extend their lease with a peppercorn ground rent on payment of a premium.

The amendment to the lease term is unlikely to be too controversial but amendment to the valuation process may be more complicated and contentious.

Although the commitment from the government is obviously present, there remain a lot of uncertainties and it is a question of “watch this space”.