The government has announced a package of leasehold reform measures in an attempt to tackle unfair practices within the residential leasehold system to protect house buyers and owners. The measures will affect Landlords of long leaseholds and include the following:
- a ban on almost all new-build houses being sold on long leases;
- reducing ground rents for leases of flats to zero;
- making it easier and cheaper for existing leaseholders to purchase the freehold or to extend their lease;
- making sure freeholders have equivalent rights to leaseholders to challenge unfair service charges.
The ban on new leasehold houses will require primary legislation, however, whilst the government has acknowledged that there will be exceptions (such as where the land is currently subject to a lease or to support a shared ownership scheme), it still appears to be considering what these exceptions will be but has said it will consult developers to discuss the case for other exceptions.
From an asset management perspective, if your portfolio includes residential leasehold interests, you will need to be aware that the government is specifically considering how to support existing leaseholders, secondary buyers and others subject to onerous ground rents and will introduce standards to provide leaseholders with detailed information on how to deal with any freeholder issues that arise.
It is hoped that the government will act quickly to ease uncertainty for Landlords.