On 28 June 2019, the Government published its response to the consultation undertaken in 2018, in relation to reforms to the leasehold system.

As a result of that consultation, the Government has concluded that it will implement the following measures, namely;

1. A ban on all new long leases of houses, subject to limited exceptions. An applicant for registration of a new lease will be required to declare at the time of registration that the lease is compliant with the legislation. If the Land Registry is of the opinion that the lease does not comply, the leaseholder will be able to enfranchise their lease that so as to gain the freehold at zero cost.

2. Ground rents will be restricted under new long residential leases to a peppercorn subject to limited exceptions. Any ground rent above this level will be unenforceable in law. If the leaseholder pays ground rent contrary to the legislation, they will be entitled to apply for a refund of that rent and the associated costs.

3. There will be an introduction of statutory procedures for residential freeholds who pay the estate rent charges to enable them to challenge the reasonableness of those charges and where appropriate to appoint a new manager.

4. A requirement for landlords to provide management information on the sale of a leasehold property within 15 days of the request for a maximum fee of £200 plus VAT.

5. In relation to the extension of leases, the Government has confirmed that as all new leases will be required to have a zero ground rent, the zero ground rent policy will apply to lease extensions; but only insofar as it relates to the extended period of time. As a result, if you have 80 years remaining on a lease, and extend it voluntarily by a further 40 years, you will continue to pay ground rent under the original 80 year term, but the last 40 years (being the term of the extension) will be at zero ground rent. If the lease is extended under a statutory provision, you will still be able to extend under the statutory proposal for a zero ground rent.

Should you have any further queries regarding the leasehold process, you should contact Lorraine Lancaster on: 01702 338338 or [email protected]