The Government has responded to the recent consultation on tackling unfair practices in the leasehold market. They intend to: - 

  • Prohibit new residential long leases of new houses or of existing freehold houses (other than when land is already subject to a lease at the date of this consultation response).
  • Facilitate the enfranchisement / lease extension process and consider with the Law Commission a prescribed formula for compensation with should reduce the cost without being unfair to landlords
  • Discourage developers from promoting help to buy equity loans for purchase of leasehold houses in advance of legislation
  • Ensure that in future ground rents on new long leases of houses and flats are set at a peppercorn
  • Consider how they can help existing leaseholders with onerous ground rents - they want developers to introduce schemes to compensate individuals including second hand buyers
  • Work with redress schemes and Trading Standards to provide information about possible redress for negligent advice given by conveyancers in respect of leasehold properties and consider with the Law Commission whether the Unfair Terms legislation can apply to leaseholds
  • Provide a right of first refusal for leasehold houses
  • Amend the Housing Act 1988 to ensure long leaseholders paying a ground rent of more than £1000 in Greater London or £250 elsewhere in England are not subject to an assured shorthold tenancy and to a mandatory possession order for ground rent arrears 
  • Give freeholders the right to challenge service charge in the same way as leaseholders
  • Ensure, where the freeholder pays a rent charge, that the rent charge owner is not able to take possession or grant a lease on the property where the rentcharge remains unpaid for a short period of time.

In further legislation they intend to inter alia :

a) Professionalise managing agents

b) Introduce a minimum lease terms for new long leases of flats

c) Reinvigorate commonhold and persuade lenders to change their criteria relating to it.

Changes to legislation will be welcomed so that investors, ordinary buyers and indeed lenders to both can get some certainty.