Leasehold Reform and Property Ownership
Significant changes to residential leases could come with new legislation proposed next month in the King’s speech.
There are an estimated 4.9 million residential leases in the UK and solicitors welcome changes to the existing system and plans in the Leasehold Reform Bill in November, although no date is set as yet for implementation of the Bill.
The aim of the Government is to make buying and selling leasehold property much easier. For many years, this area of the law has been complex and confusing for homeowners and prospective buyers and so what changes are proposed?
What is the Leasehold Reform Act?
Last year, the Leasehold Reform (Ground Rent) Act came into force. Following this, only a peppercorn rent, which is effectively zero, can be demanded under the new long leases for flats and houses.
The aim here was to stop any unfair practice of inserting clauses into the terms of a lease – in some cases this had led to doubling of the ground rent after a period of time and the rent could then continue to rise.
The reform was only relevant to new leases and did not apply to existing leases, however, the overall aim was to ‘improve fairness and transparency’.
Michelle Ong, residential conveyancing solicitor at Pearson helps many clients with freehold and leasehold property states says:
“This is an incredibly complex area of the law which I am sure will not change overnight, however, any steps to make it easier for clients and which reforms the system is welcomed.”
“Leasehold can be complicated to understand and is a different legal status to freehold, whilst it is mainly focused on flats, there are many of the houses we deal with which are leasehold. If you are looking to purchase the freehold from the Landlord, instructing a solicitor to review the draft documentation making sure there are no onerous conditions being added is crucial.” Michelle Ong adds.
What is the difference between Freehold and Leasehold?
Essentially, with freehold you own a property and land it’s built on outright and until you come to sell it.
With leasehold, you have a lease which gives you the ‘right to occupy’ a property for a certain amount of time (usually between 99 and 999 years); you do not actually own the land.
Your leasehold term will be stated in your legal documents. You will pay a ground rent for the land the property is built on and these vary in price. Homeowners will have the option to purchase the freehold reversion.
How can we help?
For legal advice on buying and selling a property, whether it is a freehold or leasehold property contact our residential conveyancing solutions on 0161 785 3500 or email email@example.comSubscribe to our newsletter
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.