Leasehold reform

Own freehold property with more ease

If you’re a homeowner of a leasehold property, the bill means you should find it easier to own your home as a freehold. For starters, developers will likely be banned from building new houses with leaseholds, making it less likely a house will be leasehold in the first place. You should see that purchasing the freehold on a leasehold property becomes less expensive.
In addition, if your property is part of a building divided up into 50% of commercial units, such as shops and/or offices, you’ll have a better chance of buying the freehold and taking over management. Restrictions beforehand meant doing this was only possible if the building consisted of just 25% in commercial property.

Longer lease extensions

The standard lease extension term should change from 90 to 990 years, giving leaseholders more security in their property’s future. Potentially, it could also make it easier to attain a mortgage, as lenders tend to prefer it when a leasehold property has a longer lease. At the point of a lease extension, any ground rent fees payable would be cancelled out.
In addition, if you have purchased a leasehold property, you’ll be able to extend the lease immediately, with the necessity to wait two years abolished.

Faster buying and selling

Following the proposed changes, leasehold properties should be faster to buy and sell. This will be aided by a set deadline for the time a landlord or freeholder needs to provide information required for a sale to leaseholders. There should also be a set limit for the related fee.

Service charges and other costs

The bill suggests there will be more clarity about what service charges are paying for. The managing agent of the leasehold and the freeholder will be required to provide details of the costs in a standardised way, which is easier to compare and challenge if necessary. In addition, building insurance commissions would be replaced by a clear administration fee for freeholders, landlords, and managing agents. If you were a leaseholder who found the need to challenge your freeholder in court, you would no longer necessarily need to pay the freeholder’s legal costs, either.

Redress Schemes

The Government plans to extend redress schemes, making it easier for leaseholders to challenge poor practices by their landlords. Additions are planned on the Building Safety Act 2022, aiming to prevent where relevant, developers and freeholders from avoiding aftercare and repair works.

Sources:

https://assets.publishing.service.gov.uk/media/654a21952f045e001214dcd7/The_King_s_Speech_background_briefing_notes.pdf