Property reforms to save costs on leases for homes

PROPERTY REFORMS that will allow leases on homes to be extended by almost 1,000 years could save leaseholders “tens of thousands of pounds”, according to the Government.

The Ministry of Housing, Communities and Local Government said the shake- up, which will give leaseholders the right to extend their lease by 990 years, means millions of people will no longer have to pay any ground rent to the freeholder, removing added expense from owning a home.

The proposals, announced by Housing Secretary Robert Jenrick, are being billed as some of the biggest reforms to English property law for 40 years as ministers strive to make home ownership fairer and more secure.

A freeholder owns both the property and the land it stands on while leaseholders only own the property, paying ground rent to the freeholder.

Mr Jenrick 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.”

Officials said the changes could save leaseholders thousands of pounds, rising to tens of thousands of pounds for some. The elderly will also be protected, with Ministers reducing ground rents to zero for all new retirement properties. Under current rules, leaseholders of houses can only extend their lease once for 50 years with a ground rent.

This compares to leaseholders of flats who can extend as often as they wish at a zero “peppercorn” ground rent for 90 years.

The reforms mean both house and flat leaseholders will now be able to extend their lease to a new standard 990 years with a ground rent at zero, said a department spokesman.

Labour Shadow Housing Minister Mike Amesbury said: “The Labour Party together with campaigners has been calling on the Government to end this feudal system. The first steps set out today have been a long time coming.”