Government announces its intention to implement reforms to the residential leasehold system.

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In July 2020, the Law Commission published a report setting out recommendations aimed at making it easier and cheaper for flat owners to extend their leases or to buy the freehold of their building.

One of the Commission’s most eye-catching recommendations (although not its most radical) was for the prescribed period of an extended flat lease to be increased from the current 90 years to 990 years (accompanied by a zero, or “peppercorn”, ground rent). The government has announced that legislation will be brought forward in the upcoming session of Parliament to implement this recommendation.

In addition, the government has said that it intends to further reform the system by:

  • Removing the concept of “marriage value” from the calculation of purchase prices.
  • Introducing an online calculator to allow flat owners to calculate the cost of extending their lease or buying their freehold.
  • Ensuring that the existing proposal for zero ground rents for new leasehold properties is expanded to include leasehold retirement properties.
  • Establishing a “commonhold council” to reinvigorate commonhold.

The first two proposals – the removal of marriage value and the introduction of a calculator to ascertain purchase prices – really would represent a radical shift, and a very welcome change for flat owners with short leases. In principle, it will be easy enough remove marriage value from the statute book (it has been amended in the past), but it is not at all clear how a “one size fits all” calculator could be developed.

Whatever combination of reforms are enacted, it seems clear that the pendulum is swinging back in favour of flat owners. However, having announced these reforms it is now incumbent on government to get them onto the statute book without delay. Whether it can in the current “post-Brexit” and “Covid” climate remains to be seen.

Call or email Dan Ongley on 01273 384015 or d.ongley@griffithsmith.co.uk