The Housing Secretary Robert Jenrick has announced an end to complex leasehold costs. Millions of leaseholders will be given the right to extend their lease by a maximum term of 990 years at zero ground rent.
When someone purchases a property, including the land it is built on, this is a freehold.
A leasehold is when a person owns a lease, giving them the right to use the property. However, as the still have to get their landlords permission to carry out any work or make changes to the property.
When a leasehold flat or house is first sold, a lease is granted for a fixed period of time, for example, 99 – 125 years, although often 999 years is seen. It is possible to extend the lease, or buy the freehold but this can be complicated, expensive and involve legal fees.
A leaseholder is often charged ground rent as well as fees if they want to make changes to the property.
Today’s changes mean that any leaseholder who chooses to extend their lease on their home will no longer pay any ground rent to the freeholder. Leaseholders of both flats and houses will be able to extend their lease to a new standard 990 years with a ground rent at zero. A cap will be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder.
Further measures will also be introduced to protect the elderly. The Government has previously committed to restricting ground rents to zero for new leases to make the process fairer for leaseholders. This will also now apply to retirement leasehold properties (homes built specifically for older people), so purchasers of these homes have the same rights as other homeowners?and?are protected from uncertain and rip-off practices.
Housing Secretary Robert Jenrick said: “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.”
This means leaseholders will have the opportunity to fully own their home without the cumbersome bureaucracy and additional, unnecessary and unfair expenses.
If you would like to discuss any aspect of selling please get in touch with your local Seddons branch.