The government has announced changes in the leasehold system so people won’t have to pay ground rent, making it cheaper and easier for leaseholders to buy their homes. Other proposals include the right to extend a lease by a maximum of 990 years.
Current rules state that a leaseholder can extend their lease for a maximum of only 90 years. Some leaseholders have to pay ground rent to freeholders, which may increase year-on-year. The proposed changes could make it easier for leaseholders to buy the freehold to their homes or extend their lease.
Housing Secretary Rt Hon Robert Jenrick MP commented: “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.”
A previous study, titled Leasehold: A Life Sentence? showed that 31% of surveyed leaseholders looking to sell their home were struggling to find buyers. One in five people have tried to buy the freehold to their home, with a further 41% considering purchasing the freehold to their home. Of the people in the survey, 93% say they wouldn’t buy a leasehold property again.
Mark Hayward, chief policy adviser, NAEA Propertymark, explained: “What’s worse, when a sale has completed, lots of developers pass the buck and sell the freehold to third parties within two or three years, which means the terms in the contracts homeowners sold change once they’re locked in and they’re completely at the mercy of the freeholder. It’s good progress that there are now restrictions on selling houses as leasehold, but clearly this does not help those who are already trapped in a leasehold home.”
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