Government announces biggest reforms to English property law for 40 years
On 7th January 2021, the Ministry of Housing, Communities and Local Government announced that millions of residential leaseholders will be given a new right to extend their lease by 990 years with zero ground rent. In addition, any ground rent payable when a leaseholder chooses to extend their lease or become the freeholder will be capped.
A “Commonhold Council” will be formed comprising of industry and government bodies along with leasehold groups. The aim of the Council is to revive commonhold ownership, ensuring homeowners will be able to call their homes their own.
The Law Society welcomed the reforms. David Greene, president, said: ‘Leasehold reform is a complex, important and necessary task with many different interests at stake. The reforms announced by the government today should deliver real benefits for current leasehold homeowners and future buyers, many of whom are being failed by the current system.’
He added: ‘If commonhold is to develop as an alternative to leasehold, then the government must encourage its creation on a much wider basis. Incentives will need to be offered to developers, lenders and buyers if this is to happen. We look forward to contributing to the work of the Commonhold Council.’
Whilst these reforms seem attractive at first sight, many practitioners have been quick to criticise as there have been no precise details of how this will work in practice. We will keep updating the information as it is published.
If you have any queries, please contact FTA Law on telephone number 0330 088 2275 or email the Head of Commercial Property on carley.ellis@fta-law.com
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