Private landlords who invested in leasehold homes could soon be rid of the extortionate fees associated with their investments.
A report by the Law Commission revealed how it could be easier for those who bought leaseholds – including private property investors – to purchase their freehold, extend their lease or eliminate their ground rents.
The proposed options include giving owners of leasehold properties the ability to extend their lease for almost 1,000 years and removing the need to pay rent to the freeholder.
It comes after thousands of property owners have been faced with doubling ground rents and more developer fees.
This has left some homeowners and private landlords unable to sell their properties, because lenders are refusing to provide loans to potential buyers of these homes.
The government has already announced a ban on houses being sold on a leasehold basis. It’s also announced a ban on developers from selling leases that contain an obligation to pay any money as ground rent.
The Law Commission has now gone further and is advising the government that leaseholders should have the right to a lease extension for a term of 990 years. This is as opposed to extensions of 90 or 50 years under current law. There should also be no ground rent under the extended lease, it’s suggesting.
However, it could be years before the proposals become law and they will not help existing leaseholders.
The Law Commission is also calling for leaseholders to be able to buy their freehold immediately after purchasing their home, rather than waiting two years as they do now.
Professor Nick Hopkins, commissioner for property law, said: “The leasehold system is not working for millions of homeowners in England and Wales. We have heard how the current law leaves them feeling like they don’t truly own their home.
“Our reforms will make a real difference by giving leaseholders greater control over their homes, offering a cheaper and easier route out of leasehold, and establishing commonhold as the preferred alternative system.
“The reforms will provide a better deal for leaseholders and make our homes work for us, and not somebody else.”
The Law Commission also proposed an expansion to the commonhold system. This gives flat owners an option other than leasehold.
It was introduced in 2002 to enable the freehold ownership of flats. It lets residents of a building own the freehold of their individual flat, while managing the communal areas through a company.
Currently, flat owners need the agreement of other parties to go ahead with this system. But the Law Commission is suggesting that this requirement is removed so leaseholds can convert to commonhold without the approval of any other parties.
What do you think about the proposed changes to leasehold? Let us know in the comments below.
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