RIP-OFF leasehold rules will be torn up for millions under a revamp of property laws which will save people thousands.
Owners will be able to extend their lease by a maximum term of 990 years at zero ground rent in a major announcement today by Housing Secretary Robert Jenrick.
The changes mean that any leaseholder who chooses to extend their lease on their home will no longer pay any ground rent to the freeholder and not have to deal with extra paperwork or additional costs.
Ground rents will be scrapped for millions, stopping people who already own their home from being trapped in spiralling costs for years after they own their homes outright.
The so-called “marriage value” will be ditched, making charges more transparent.
Under current rules, leaseholders of houses can only extend their lease once for 50 years with a ground rent, and flats can extend as often as they wish at a zero ground rent for 90 years.
The news changes will level the playing field with a new standard rate of 990 years.
Ground rents should be set to zero for new homes too.
It’s thought the change to the law will save owners of properties like flats, thousands of pounds.
Leaseholders have long been trapped in their homes if they are unable to afford to extend their lease.
And those who don’t own the property as a freehold can be subject to spiralling costs as owners hike up ground rents repeatedly – leaving them unable to sell.
Some landlords have sold on their leases to external third party companies which charge even more, with no means of escape.
People will be able to use a new online calculator to help people work out the costs, too.
The government is looking to do away with the leasehold system, and replace it with ‘commonhold’ where owners of flats share the ownership of the entire block and can have a say on how it’s run.
They are setting up the ‘Commonhold Council’ to help oversee the project while bringing in the new laws later this year.
It means if residents aren’t happy with the way their homes are being run, they can apply to do it themselves.
Further measures will be introduced to protect the elderly, with ground rents on retirement leasehold properties set to zero.
Professor Nick Hopkins, Commissioner for Property Law at the Law Commission said: “We are pleased to see Government taking its first decisive step towards the implementation of the Law Commission’s recommendations to make enfranchisement cheaper and simpler.”
Mr Jenrick said: “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.”
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