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Reforms aim to tackle ‘injustices’ in leasehold system

17 Jul 2024 2 minute read
Cardiff Bay photo by Ashley Bovan is licensed under CC BY-NC-ND 2.0.

Further moves to “bring the feudal system of leasehold to an end” have been set out.

Under the plans announced as part of the King’s Speech, the Government aims to act quickly to provide homeowners with greater rights, powers and protections over their homes by implementing the provisions of the Leasehold and Freehold Reform Act 2024.

It will further reform the leasehold system, enacting remaining Law Commission recommendations to bolster leaseholders’ rights to extend their lease and buy their freehold (enfranchisement), and take over freeholders’ building management functions (right to manage).

Legislation will apply to England and Wales, where there are around five million leasehold homes.

Leasehold flats

Commonhold will be reinvigorated through a new legal framework and the sale of new leasehold flats will be restricted. The Government is to consult on how to achieve this.

The Government also wants to end “the injustice of forfeiture” so that leaseholders are protected against losing savings they have in their home for potentially small unpaid debts.

Leaseholders can be threatened with forfeiture and the loss of their home for sums as little as £350.

Existing ground rents for existing leaseholders will be regulated to help prevent unaffordable costs.

Housing stock

The measures come alongside the Government’s plans to boost the stock of housing and deliver 1.5 million new homes over the next five years.

It also aims to bring “the injustice of ‘fleecehold’ private estates and unfair costs to an end” and it will consult on how to achieve this and implement new protections for homeowners on private estates.

There are as many as 1.75 million homes on private estates, and over recent years there has been a growth in the number of new homes built on such estates, the Government said.

The Government estimates that 86% of leaseholders pay a ground rent, averaging almost £300 per year in England.

Ground rent contracts that rapidly escalate can become unaffordable over time for leaseholders.

In a survey by Propertymark, a membership body for property professionals, 78% of their members reported that a leasehold property with an escalating ground rent will struggle to sell, even if it is priced correctly.


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