Millions of leaseholders will be given the right to extend their lease by a maximum term of 990 years at zero ground rent.
Under the current law freeholders can increase the amount of ground rent with little or no benefit seen to those faced with extra charges.
These changes will mean that any leaseholder who chooses to extend their lease on their home will no longer pay any ground rent to the freeholder, enabling those who dream of fully owning their home to do so without cumbersome bureaucracy and additional, unnecessary and unfair expenses
For some leaseholders, these changes could save them thousands, to tens of thousands of pounds says the government.
Under current rules, leaseholders of houses can only extend their lease once for 50 years with a ground rent. This compares to leaseholders of flats who can extend as often as they wish at a zero ‘peppercorn’ ground rent for 90 years.
Today’s changes mean both house and flat leaseholders will now be able to extend their lease to a new standard 990 years with a ground rent at zero.
A cap will also be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder.
An online calculator will be introduced to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.
The government is abolishing prohibitive costs like ‘marriage value’ and set the calculation rates to ensure this is fairer, cheaper and more transparent. An online calculator will be introduced to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.
The government has previously committed to restricting ground rents to zero for new leases to make the process fairer for leaseholders.
This will also now apply to retirement leasehold properties – homes built specifically for older people – so purchasers of these homes have the same rights as other homeowners and are protected from uncertain and so-called rip-off practices.
Housing Secretary Robert Jenrick says :“Across the country people are struggling to realise the dream of owning their own home but find the reality of being a leaseholder far too bureaucratic, burdensome and expensive.
“We want to reinforce the security that home ownership brings by changing forever the way we own homes and end some of the worst practices faced by homeowners.
“These reforms provide fairness for 4.5 million leaseholders and chart a course to a new system altogether.”