Michael Gove Unveils Bold Plan To Empower Leaseholders New Bill Proposes 990-Year Lease Extensions Nominal Ground Rents And Streamlined Freehold Acquisition

 

In interviews to mark the Bill's first stage, Mr Gove said: 'This bill is part of our long term plan for housing. It allows leaseholders to take back control of their properties. When people buy a leasehold flat, they believe and they should have the assurance of knowing they are buying a leasehold property for life.

'But leaseholders, unfortunately, find that the nature of the flat that they bought is susceptible to the freeholder putting up service charges, increasing ground rent, and the lease will wind down over time in a way which means the value of their property diminishes, rather than it growing, as it should for any householder.'

Mr Gove told LBC: 'This bill will mean anyone can transform their lease to a 990-year lease, so effectively taking back control of the property. It also means ground rents should be reduced to a peppercorn, just a tiny nominal amount, and there will be full transparency over service charges, so an end to exploitation. 

Rip-off charges will also be tackled, with a consultation on capping existing ground rents, to ensure leaseholders are protected from making payments that require no benefit or service in return and can cause issues when homeowners want to sell up.

Reforms to make it easier for leaseholders to purchase their freehold and tackle punitive service charges were outlined earlier this month in the King's Speech.

The changes could make it easier for people to sell their properties and get mortgages.

The Leasehold and Freehold Reform Bill aims to improve homeownership for millions of leaseholders in England and Wales, by making it cheaper and easier for more leaseholders to extend their lease, buy their freehold and take over management of their building.

The standard lease extension term will be increased from 90 years to 990 years for both houses and flats, with ground rent reduced to £0.

This will ensure that leaseholders can enjoy secure ground rent-free ownership of their properties for years to come, without the hassle and expense of future lease extensions.

The legislation follows the Leasehold Reform (Ground Rents) Act 2022, which put an end to ground rents for new, qualifying long residential leasehold properties in England and Wales.

Asked why there would still be leasehold sales of some flats, Mr Gove stressed that it is 'an incredibly complex area of law'. 

'We can't at a stroke get rid of it, we are taking a huge step forward by ensuring that people, effectively, by having a 990-year lease, will be able to own their flat in effect,' he said. 

'We're also making it much easier for people to secure control of their property, to enfranchise themselves. 

'The process in the past has sometimes been held up by the process of marriage value, the freeholder trying to extract even more cash from the leaseholder. Well, that will go. It means full ownership. 

'Yes, leasehold will still exist as a form of tenure, but effectively people will have control of their property at last.' 

Mick Platt, Director of the Residential Freehold Association, said: 'The Government's proposals to cap, or even abolish, ground rents would be a massive own goal. 

'It will cost the taxpayer enormous sums of money to compensate investors while transferring the wealth to thousands of buy-to-let landlords and leaving ordinary leaseholders with burdensome legal responsibilities and escalating service charges.'

'The Government's own research shows there is limited interest from leaseholders for this kind of intervention. It's time for Mr Gove to stop ignoring the evidence and start bringing forward sensible reforms that would actually improve the tenure.'