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New rules for leaseholders in 2021
- AuthorAmanda Payne
A leaseholder is someone who does not own the land the property sits on. The leaseholder, in order to live in the property rents it out for a length of time. A freehold owns the property and the land for an unlimited amount of time.
Millions of people will benefit from the government changes to leasehold properties. Now leaseholders have the right to extend their lease by a maximum term of 990 years at zero ground rent.
Today’s measures come as part of the biggest reforms to English property law for 40 years, fundamentally making home ownership fairer and more secure. Under the current law many people face high ground rents, which combined with a mortgage, can make it feel like they are paying rent on a property they own. Freeholders can currently increase the amount of ground rent every few years with little or no benefit seen to those faced with extra charges. It can also lengthen and lead to increased costs when buying or selling the property.
However, today’s 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.
Housing Secretary Rt Hon Robert Jenrick MP said:
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.
Amanda, Head of Conveyancing said: Over the years at Fishers, we have seen many leasehold transactions fall through because of these issues and in particular cause such distress to sellers of leasehold property faced with hefty costs of lease extensions required prior to a sale. I am very pleased to see these long awaited changes come in. With the cladding changes on leasehold flats announcement towards the end of last year, where the EWS1 form is no longer needed for buildings without cladding, this will just make it much easier now for Sellers to sell or re-mortgage their property.