7th November – Today’s announcement – what does this mean to leaseholders?

So far all we have is a commitment to alter leasehold law and to make it cheaper and easier to extend your lease or purchase your freehold.

The Government have said previously that they are committed to abolishing marriage value but until the details of this commitment are confirmed we cannot say if this will be the case. However to make the process cheaper, abolishing marriage value would be the most likely, if controversial way to do this.

They have not given any additional detail and we await further announcements. This is simply a proposed Bill and it will take some time for it to progress through Parliament and become law.

It would appear that although their commitment to the Bill has been made clear we are unable to confirm when it will become law and what the final Legislation will contain.

However based on their previous announcements the Bill is likely to include the following with regard to lease extensions:

1. New leases to be 990 years plus the current lease.
2. Abolition of marriage value (on any leases below 80 years – above 80 years there is already no marriage value).
3. A cap on ground rents that can be used in the premium calculation no matter how high they are or will be over the term of the lease.
4. A possible reduction of all current ground rents to zero. This is yet to be confirmed.
5. Freeholder’s to pay all their own costs.
6. A commitment to make the valuation process more regimented and ‘cheaper’ for leaseholders.
7. The possible abolition of the two year ownership rule – currently required in order to qualify to extend a lease.

With regards to freehold purchases the proposals are similar however there is a proposal for dealing with any development land or roof space with a potentially high value, which is owned by the freeholder. The proposal is that this land or roof space can be leased back to the freeholder to avoid any excessive costs when acquiring the freehold.

There is also a commitment to ban the sale of leasehold houses unless in exceptional circumstances.

My current advice is as follows:

• If you have a lease above 80 years unexpired then I recommend that you seriously consider moving forward with your proposed lease extension or freehold purchase. However if you have a very high rising ground rent seek professional advice before proceeding.
• If you have to extend your lease to obtain finance or as part of a sale or purchase – you may have no other choice but to continue with your lease extension.
• If you want to extend your lease or purchase your freehold to suit your own personal circumstances then you may have to proceed regardless of any proposed new legislation.
• If your lease is below 80 years unexpired and you have time, then I recommend that you wait to see how the proposed Bill progresses. This is a short term of Parliament and there are many proposed Bills to process, there is still no guarantee that the proposed new legislation will become law.

If you need further advice about any aspect of residential leasehold property, please feel free to contact me