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Leasehold Reform and the King’s Speech

The world of Leasehold reform has long awaited the Governments proposals in respect of leasehold reform and in the King’s Speech we finally have them. It is intended to make it easier and cheaper for lessees to extend their ...

The world of Leasehold reform has long awaited the Governments proposals in respect of leasehold reform and in the King’s Speech we finally have them.

It is intended to make it easier and cheaper for lessees to extend their leases or buy the freehold but His Majesty did not tell us how this will be achieved or when. The only specifics are that there will be no more leasehold houses, the prohibition does not apply to flats, lease extensions will be an additional 990 years rather than 90 years and the two-year ownership qualification period for lease extensions will no longer apply but further legislation is required to implement these reforms. From a lessee’s viewpoint there has been no change and we can have no idea when the proposed changes will take place. They will not significantly alter the cost of a lease extension or freehold purchase.

There was no mention of the removal of marriage value which had been anticipated by many and would have made a significant difference to cost and although the Governments briefing notes give examples of savings on lease extensions their proposed reforms will achieve there is no indication as to what those reforms will be.

Informed opinion (Eleanor Langford, “The i”) is that there is only a 60% chance of these proposals becoming law and it is unlikely to be achieved before the next General Election.

We are of the opinion that the cost of extending your lease or buying the freehold will not reduce in the immediate future as it will take some time for the required legislation to be drafted, agreed with interested parties and professional bodies and then enacted by Parliament but meanwhile the cost will continue to rise as the unexpired term of the lease diminishes and that delay will not be to a lessee’s advantage. The Government in its briefing notes give an example of a saving in the cost of a lease extension but unfortunately did not provide a calculation or explain how their reforms would affect the existing calculations.

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