Government opens consultation to shake up leaseholder system

Toby Weiss

Toby Weiss

Corporate Marketing Manager at Reapit

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Government opens consultation to shake up leaseholder system

The government has announced plans to create a fairer system for leaseholders in England and Wales. Under the proposals it will be easier and cheaper for leaseholders to buy the freeholds of their homes.

As part of a consultation that opened today (11 January 2022), Homeowners and the housing industry are being invited to give their views on proposals from the Department for Levelling Up, Housing and Communities to allow more leaseholders in mixed-use buildings to take control and ownership of their building.

The consultation, running for 6 weeks until 22 February 2022, seeks views on proposals to give more leaseholders the ability to manage or own their properties – in buildings where there is a mixture of homes and other non-residential facilities, such as shops and restaurants.

Under the current system, only some residential leaseholders in England and Wales can choose to buy their building outright through enfranchisement – or take over the management of their building, in what is known as a ‘right to manage’.

New proposals could give these leaseholders the right to manage or buy their building outright, by increasing this limit to 50%, enabling them to have more control over how shared facilities are run and have the final say on building maintenance costs.

Other proposals in the consultation aim to make it cheaper for leaseholders to collectively buy their freehold. A ‘mandatory leaseback’ would require landlords to keep a lease on some properties in the building. This means reducing the cost of a collective buyout of their building – making it a reality for thousands more leaseholders.

Leasehold Minister, Stephen Greenhalgh said:

“The current leasehold system is outdated, unbalanced and broken and we are determined to fix it. Our proposals aim to rebalance power and should see more leaseholders than ever before owning the full rights to their homes. This comes on top of our new approach building safety, which includes decisive action to protect leaseholders.”

Leasehold Reform (Ground Rent) Bill

  • The Ground Rent Bill, currently in Parliament, is intended to end ground rents for most new residential leasehold properties.
  • As well as limiting ground rent to a peppercorn for most new residential leases, provisions in the Ground Rent Bill also mean that when a leaseholder extends their lease using the non-statutory process, the ground rent they pay on the extended term will be limited to a peppercorn.

Resources

Press release: More leaseholders to own their own buildings under government proposals

Open consultation: Reforming the leasehold and commonhold systems in England and Wales

 

 

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