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Top 5 planned leasehold changes 2021

Posted 21/04/2021 by Reeds Rains
Categories: Landlords/Lettings
Leasehold changes

Reforming residential leasehold is a subject that has been under serious discussion since the publication of the White Paper, ‘Fixing our broken housing market’, in 2017. The last publication on the matter was the Law Commission’s ‘Leasehold home ownership: buying your freehold or extending your lease’, which was released on 20th July 2020, following their extensive work on the proposed reforms.

Over the last few years, the Housing Secretary announced that the Government intends to make changes as “part of the biggest reforms to English property law for 40 years, fundamentally making home ownership fairer and more secure.”


Here are five changes we should expect to see implemented over the next few years:

  1. The right to extend a lease up to 990 years, with zero ground rent

    At the moment, leaseholders of houses can only extend the lease once, with ground rent, whereas flat owners can extend as often as they wish at a zero ‘peppercorn’ ground rent for 90 years. The new legislation will enable leaseholders to extend for longer with zero ground rent.

    The Government is also going to bring forward legislation in the next session of Parliament, to set future ground rents to zero and some new build developers have already adopted 990 year leases with zero ground rents.
  2. An end to ‘marriage value’

    As it currently stands, the increase in the property’s value following an extension of the lease must be shared equally between the leaseholder and the freeholder, which can be significant and the current proposal is to abolish this. Great news for leaseholders, but it could result in a challenge from freeholders.
  3. The introduction of a ‘Commonhold Council’

    This would be an industry-wide commission, charged with preparing homeowners and the market for the take-up of the type of commonhold model that’s already used widely around the world. It allows homeowners to jointly own the block or building, meaning residential premises are not under the control of a separate third-party freeholder and anyone who buys a flat or house truly owns it.
  4. Landlord fees for providing leasehold information to buyers to be capped at £200 + VAT

    When a leasehold property is sold, landlords/freeholders or their managing agents have to produce a detailed information pack on legals and costs for the buyer and any disputes.

    Currently, the leaseholder has to pay for this and it can be upwards of £750 in more expensive areas, so it could help save money when selling in the future.
  5. A new time limit of 15 working days to provide leasehold information to a buyer

    While leasehold transactions tend to be naturally more time and labour-intensive than those for equivalent freehold properties, the Government intends to help speed up the process by making it a statutory requirement for landlords to provide leasehold information within 15 working days.

While all of this is certainly heading in the right direction, more information on these proposals is required before any changes are implemented. As it stands, professionals in the property sector are calling for greater clarity on timescales, technical legal details and how the changes will work in practice.

Meanwhile, if you’re looking to invest in a leasehold property, it’s worth reading our 'What is a leasehold anyway' article first.

If you have any more questions about these proposals or would like to discuss anything else about leasehold properties, just contact your local Reeds Rains branch and one of the team will be happy to help.

The Reeds Rains Content Marketing Team

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