In the aftermath of the King’s Speech, the Leasehold and Freehold Reform Bill 2024 was presented to the House of Commons on November 27, 2023. It has the primary goal of simplifying processes and reducing costs for leaseholders, the government has outlined several key changes:
- Ban on new leasehold houses: The proposal includes prohibiting the creation of new leasehold houses in England and Wales.
- Elimination of 50% marriage value requirement: The Bill aims to remove the obligation for leaseholders to pay 50% of Marriage Value to the freeholder.
- Extended lease terms: The standard lease extension term for houses and flats is set to increase from to 990 years, accompanied by a zero ground rent.
- Immediate benefits for new leaseholders: New leaseholders may no longer need to wait for two years before benefiting from these proposed changes.
- Increased flexibility for leaseholders: Buildings with up to 50% non-residential floorspace could see an expansion in the ability of leaseholders to buy their freehold or take over management (up from 25%).
The government has also initiated a consultation alongside the Bill, seeking opinions on options to limit ground rents for existing leaseholders. In some cases, the Bill is seeking to cap ground rents at 0.1% of the property value.
The legislative process is underway, with the government expressing a commitment to timely delivery. The Bill must complete its journey through Parliament before a General Election, expected by January 28, 2025. However, the complexity of the legislation and potential legal challenges may introduce uncertainty and delays.
The final form of the new Bill is unknown. The government aims to simplify processes, but critical details about premium or price calculations are still pending.
What should I do?
Each individual circumstance will be different, so please do call one of our specialist valuer’s and we can give you all the information we can to help you make a decision when extending your lease.
Stewart Gray FRICS – Chartered Surveyor and Partner – 01273 201988.
Kate Buckley AssocRICS – Graduate Surveyor – 01273 201981.
