Leasehold Reform Update

The press release has confirmed that the Government will legislate on the following reforms recommended in the Law Commission’s report:

1. Setting future ground rents to zero.
2. The right for tenants to extend their leases by a maximum term of 990 years at zero ground rent.
3. The abolishment of prohibitive costs’ specifically including marriage value, when extending a lease and the introduction of a set calculation for the premium to ensure the lease extension process is fairer, cheaper and more transparent.
4. The establishment of a commonhold council to encourage the use of commonholds.

Although it is not clear when the changes will come into force, the Housing Secretary Robert Jenrick has revealed that the Government will be legislating later this year to mandate zero ground rents and then moving forward more generally [taking forward wide-spread legal reform].

The press release does not respond to each recommendation made in the Law Commission’s report but does state that the Government will bring forward a response to the remaining Law Commission recommendations in due course.

We will continue to monitor the progress of the legislation and to lobby that any legislation should cover the anomaly that means that if existing ground rents exceed certain levels, the property can be unmortgageable.