Leaseholders won’t see all the hoped-for benefits from the Leasehold and Freehold Reform Bill unless significant changes are made, according to a leading expert.
Despite more than 50 new clauses and countless amendments being proposed, the government has failed to table wording that would ban developers selling new houses on a leasehold basis, says Linz Darlington, (main picture, inset) MD of lease extension specialists, Homehold.
The Bill in its current state doesn’t make it cheaper for people to extend their leases or buy their freeholds, and is still missing the key components and rates, which will be set later by the Secretary of State.
“The opposition rightly pointed out that if these rates were reduced it would have a punitive effect on leaseholders - making lease extensions and freehold purchases more expensive. Labour proposed amendments to stop this happening, but these were opposed by the government,” explains Darlington.
“Under current leasehold law, following the breach of a lease or an unpaid debt, a leaseholder could be required to forfeit their lease - and hand the keys of their valuable property back to th e freeholder. Again, a new clause to abolish forfeiture was voted down by the government.
“Despite speedy progress through the House of Commons, the Bill in its current state still fails to meet many of its policy objectives.”
The proposed legislation should make it easier and cheaper for leaseholders to buy their freehold, increase standard lease extension terms to 990 years for houses and flats (up from 50 years in houses and 90 years in flats), and provide greater transparency over service charges. It will remove the requirement for a new leaseholder to have owned their house or flat for two years before they can extend their lease or buy their freehold.