This article was submitted by Greenaway Scott
Last month the Government published a consultation paper entitled Tackling Unfair Practices in the Leasehold Market, seeking views on possible leasehold reform. The suggested reform includes prohibiting the sale of new build leasehold houses (where the developer is not obliged to sell the property on a leasehold basis), limiting ground rents on new residential leases over 21 years, and providing freeholders on private estates with rights to challenge the reasonableness of estate service charges.
It is important to remember that there are a number of benefits to selling a property as leasehold rather than freehold. It means the landlord can retain control over the estate and how it looks. The landlord can make sure that the exterior of the estate is kept clean and tidy, keep control over parking, and control future alterations and exterior decoration of the properties. However the Government has published this consultation in response to a number of headlines which have highlighted the current issues with the leasehold regime. These include ground rents increasing excessively and the freehold being offered to the occupier of the property at a large premium. These issues can make it unaffordable for families to stay in the property and can actually make the property unsaleable.
The last major reform to the leasehold regime was in 2002 with the introduction of the Commonhold and Leasehold Reform Act 2002. There have been minor changes since then, however it is felt that reform is now necessary to deal with concerns over the transparency and fairness of selling new houses on a leasehold basis. This was first highlighted in the Government’s Housing White Paper Fixing Our Broken Housing Market, in which the Government committed to consult on a range of measures to tackle unfair and unreasonable abuses of leasehold.
The Government is seeking responses to the consultation paper by midnight on 19th September and the proposals currently only relate to England.