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New leasehold rules ‘is excellent news for future leaseholders’
The leasehold reform bill, which looks to restrict ground rents for future leaseholders, concluded its journey through parliament this week.
The bill, the first of a two-part reform, restricts ground rent owed on new leases. But it has been criticised by a number of property professionals for excluding existing leases from the ban, leaving a number of leaseholders still facing thousands of pounds of ground rent each year.
However, a second bill is promised in the future to address issues with existing leases.
Lord Greenhalgh, the member of the Lords in charge of the bill, committed to the commencement date for this bill being within six-months of Royal Assent.
Linz Darlington, who is the CEO of lease extension specialists Homehold, commented: “The passing of the Leasehold Reform Bill through both houses of Parliament is excellent news for future leaseholders – it will ensure that they do not find themselves in the same situation as those existing leaseholders who have ground rents escalating to tens of thousands of pounds per year.”
“The bill does nothing to help existing leaseholders, and if it is not followed swiftly by further reform, could make their situations worse.”
“By banning ground rents on new leases, leaseholders of flats with ground rents will essentially find that their properties become second-class assets – making them harder to sell and mortgage.”
“This was the opening of a window of opportunity where freeholders will be able to incentivise leaseholders to accept terms on lease extensions and new leases which will soon be illegal. Despite protestations from both Liberal Democrat and Labour Lords, an amendment to introduce a safeguard to stop that happening was withdrawn.”
“In order to improve the situation for existing leaseholders, we need the second part of the reform to be introduced without delay. It is disappointing that when pressed on whether this second bill would be in the next Queen’s Speech, Lord Greenhalgh refused, simply stating “I cannot give a commitment about what will appear, but my expectations are that leasehold reform will be front and centre around his [Michael Gove, secretary of state for housing] ambition for a wider reform of housing.”
Original story by Marc Da Silva – Property Industry Eye
