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Leasehold Reform - making home ownership fair and more secure
- AuthorElizabeth Sugden (nee Simpson)
On 7 January 2021, changes came into force which enable leaseholders to extend their leases by up to 990 years without the need to pay any ground rent. There are currently approximately 4.5 million leaseholders in the UK who face paying high ground rents which, when combined with the costs of a mortgage, can seem like they are paying rent for a property they own.
Under current rules, freeholders can increase the ground rent payable by leaseholders with little restrictions. Leaseholders of flats and apartments are only entitled to extend their leases for a maximum of 90 years with zero ground rents, and leaseholders of houses are only entitled to extend once for up to a paltry 50 years with a ground rent.
The changes will mean that leaseholders are able to extend their lease to a new standard 990 years with the ground rent capped at zero.
Going forwards, legislation will be brought in the upcoming session of Parliament to set all future ground rents to zero.