The King's Speech - Leasehold Reforms Announced

After much speculation, Lease Reforms have been addressed in the King’s Speech with a proposed Leasehold and Freehold Bill to reform the housing market

What we were expecting:

Prohibition on the creation of new leasehold houses but not for new flats

Capping ground rents for existing leases which would be a further step forward from the current ban of ground rents for new leases under the Leasehold Reform Ground Rent Act 2022

Abolishment of marriage value – an additional charge payable by the leaseholder when the lease has fallen below 80 years at the time of requesting a statutory extension

Statutory lease extension applications to extend the term from 90 years to 990 years

What has been announced:

The Leasehold and Freehold Bill to improve home ownership for leaseholders by making it cheaper and easier for more leaseholders to extend their lease, buy their freehold, and take over management of their building

Prohibition on the creation of new leasehold houses, save in exceptional circumstances

A new calculation to determine the value and costs of a lease extension

Statutory lease extended terms will be increased from 90 years to 990 years with a zero-ground rent

Leaseholders will no longer need to have owned the property for two years to be able to extend their lease.

Increasing the 25% threshold for mixed-use property to 50% so that property with up to 50% non-residential will qualify for the right to manage and enfranchisement claims.

Full details can be found at pages 45-47 of the King's Speech:

The King's Speech background briefing notes

It is yet to be determined when and how these reforms will take effect, but it is good news for those who have been considering an enfranchisement claim.

If you have any queries about the reforms or considering a lease extension, right to manage or collective claim, please contact laura.poulloura@lbmw.com