Another milestone reached but will this be the leasehold revolution needed to end the Leasehold Scandal and reLEASE millions of Leaseholders ? The devil will be in the details.
Last week the government announced the biggest reform to English property law in 40 yrs.
- Millions of leaseholders will be given a new right to extend their lease by 990 years
- Changes could save households from thousands to tens of thousands of pounds
- Elderly also protected by reducing ground rents to zero for all new retirement properties
MHCLG press release can be found here:
NATIONAL LEASEHOLD CAMPAIGN WELCOMES ANNOUNCEMENT ON LEASEHOLD REFORM
The National Leasehold Campaign (NLC) welcomes the announcement on leasehold reform and commends the Government and the Law Commission for listening to leaseholders and taking radical steps towards abolishing this feudal system.
Systematic mis-selling of new build properties with exorbitant ground rents has led to a large increase in leaseholders facing big bills for ground rents, which are a charge for NO service, rip-off permission fees and escalating service charges and estate management fees. Existing leaseholders face trying to navigate a system that is stacked against them and designed to maximise profits for freeholders.
NLC founder and spokeswoman Katie Kendrick, a children’s nurse from Ellesmere Port said: “For far too long leaseholders have been told that it is their own fault for signing these toxic agreements, but this announcement proves how flawed this system is and is the start of the end for leasehold. We are delighted that Government has committed to delivering these reforms in this Parliament and urge them to strongly reject the fierce lobbying and delaying tactics they will get from the sector determined to keep the leasehold gravy train running.”
The NLC is particularly delighted to see the reversal of the exemption on zero ground rents for retirement properties, where it is clearly morally reprehensible to take advantage of more elderly and potentially vulnerable people.
Cath Williams, a university lecturer from Liverpool, adds “Today’s announcement is great news for leaseholders. We always knew that if ground rents are abolished on new properties then there is more pressure to sort out the existing system as otherwise existing leaseholders are disadvantaged. Helping existing leaseholders to access a streamlined, simpler, cheaper mechanism to extend leases or buy their freehold is a huge step forwards and removes the current game playing by institutional investors.”
The NLC is also encouraged by the Government’s commitment to make commonhold the default tenure for communal living, putting England and Wales in line with other home ownership models across the globe.
Jo Darbyshire, the Managing Director of a pensions administration company, notes: “It is essential for existing leaseholders to be fully represented at the Commonhold Council from the start. It’s the only way to ensure its success.”
We now need a timeframe of when this will be enacted so that leaseholders can be released from the limbo they are currently in. The National Leasehold Campaign (NLC) was launched to abolish feudal leasehold laws which affect over four million people in England and Wales (one in five households) and campaigns to end leasehold tenure for houses and make Commonhold mandatory for flats.
Whilst this is a small victory, we may of won the battle but certainly not the war. The devil will be in the detail. To which we still have very little. The online Calculator sounds positive but it will depend on who programmes the calculator. The premium for lease extensions and freehold purchases is so sensitive to the capitalisation rates which is why it is paramount the calculator is programmed to benefit leaseholders the greatest. Resistance from the sector will be strong. We are more than aware how busy the sector are battling away in the tribunals to set capitalisation rates low. We have met with MHCLG and Lord Greenhalgh since the announcement to express our concerns / caution and we will continue to meet regularly with them as they are keen to continue to have our input.