The ban of the creation of new leasehold houses will be introduced in parliment today to be legalised. This change could make it easier for citizens to obtain mortgages and to sell their properties.
King Charles discussed reforms being made to the UK leasehold system in his speech earlier this month. King Charles said it would be made cheaper and easier for leaseholders to purchase their freeholds, while addressing the exploitation of homeowners through unfair and unjustifiable service charges. 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.
Expensive charges will also be addressed, 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.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. 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 standard lease extension term will be increased from 90 years to 990 years for both houses and flats, with ground rent reduced to £0.
Ultimately, these reforms fail to cover areas of real cost to the end consumer that the legislation itself creates. For example, the reforms have not made it easier for leaseholders to make payments amid the cost-of-living crisis, as service charges remain excluded from recovering credit card fees despite rental payments being included. This means agents cannot offer this as a form of payment without significant cost implications.