By Isle of Wight Observer
The landscape of lease extensions in England and Wales is poised for significant changes with proposed legislative amendments.
As property laws evolve, it is crucial for both landlords and tenants to stay informed about the potential impact on their rights and responsibilities.
Overview of the Current Lease Extension Process:
Before delving into the proposed changes, it is essential to understand the existing framework for lease extensions in England and Wales. Under the Leasehold Reform, Housing and Urban Development Act 1993, leaseholders have the right to extend their lease by an additional 90 years, with a peppercorn ground rent (a nominal rent). The process involves serving a formal notice on the landlord, triggering negotiations and, if necessary, the involvement of the First-tier Tribunal (Property Chamber).
Proposed Changes:
1. Extension of Lease Term: One significant proposed change is the potential extension of the lease term beyond the current 90 years. The government is considering increasing the maximum term to 990 years for flats and houses.
2. Ground Rent Reform: Ground rent has been a contentious issue in leasehold arrangements for some time now. The government is contemplating reforms to ground rents, including the possibility of reducing them to zero. This aims to alleviate the financial burden on leaseholders and make properties more attractive to potential buyers. Landlords, however, may express concern about the potential loss of income.
3. Online Calculator for Lease Extensions: To streamline the process, the government is considering the introduction of an online calculator for lease extensions. This tool could provide a transparent and standardised method for calculating lease extension premiums, reducing ambiguity and potential disputes. Both landlord and tenants may benefit from increased clarity in negotiations.
4. Prohibition of Leasehold Houses: The government is exploring measures to prohibit the creation of new leasehold houses, limiting such arrangements to flats.
The above changes were introduced to the House of Commons on 27 November 2023 by way of the Leasehold and Freehold Reform Bill 2023-24. It is presently unclear what the final outcome will be and when any changes passed will come into force.
At Biscoes, whether you are a landlord or tenant we can assist you so please call our friendly property team on 01983 533938 to discuss your requirements.