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Leasehold Reform Still Has A Long Way To Go

06.12.23

For over six years the government has had the ambition to make it cheaper and easier for leaseholders to extend their leases or purchase their freeholds. The most recent promise to do so was in the King’s Speech on 7 November.

The first steps have now finally been made towards enacting that promise, by introducing a Leasehold and Freehold Reform Bill into the House of Commons and demonstrating a commitment to legislate quickly by scheduling a second reading.


The bill certainly follows the spirit of making it cheaper and easier. One example, is that it removes the requirement for leaseholders to pay “marriage value”, which is a share in the hypothetical profit they will make when they extend their lease. A second, is that it will make it cheaper for people paying high ground rent to buy it out as part of their lease extension, by capping ground rent in the calculation.

However, many leaseholders are still left without any clarity about whether their lease extension will be cheaper, or whether it could be actually made more expensive.

Various rates are used in the calculation to work out lease extension premiums and even small changes can have a significant impact on the lease extension price. Alarmingly, these rates are not specified in the primary legislation - instead, they will be set by the government in secondary legislation and without the same scrutiny of parliament.

It's of paramount importance that these rates are set and discussed alongside the passage of the bill through the parliamentary process. Without doing so, there is no true way of understanding whether the benefit promised by the bill will actually be realised.

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