What the Proposed Leasehold Reform Changes Mean for Purchasing Your Freehold
On Thursday 7th January, the government put out a press release about a radical change to the way leaseholders could either extend their leases or purchase their freehold interests with much-reduced premiums. The press release was intended to show that the government was on the leaseholders' side. Following discussion with our clients, we wanted to clarify a few points.
The Government's only commitment was to bring forward legislation banning ground rents on new leases in this parliament.
It said that the rest will come "in due course". This could be because the provisions of the Act are not yet written or could have problems ensuring there are no unintended consequences.
Although the papers appear to suggest this would all be in place shortly, it could take 3 to 4 years before it becomes law.
Therefore, leaseholders trying to sell their property with short leases (less than 85 years) may still have to extend their leases under the current legislation.
There is no guarantee that the new legislation will have all the provisions currently being proposed, but this news could be unfavourable for freeholders in the long term. Still, some market commentators suggest this could raise Human Rights issues which, if proved, would result in the government having to pay out billions in compensation to the freeholders who will see the value of their assets greatly diminished.
We will continue to keep you updated as this unfolds and are here to answer any of your questions in the meantime. Please contact me to see how it may impact your current assets.