This week I have written a timeline on the government’s proposal to reform new leasehold agreements.

The government statistics state there is an estimated 4.6 million leasehold homes in England. 68% of those are flats, with the remaining 32% houses. Of that percentage, 93% are owner occupied. Leasehold houses are not a regular occurrence but apparently, 28% of houses in the north-west region, are in fact leasehold. It seems that developers were creating a trend, for new build houses to be sold with long leases, as it can be an additional income stream in years to come. Government figures show “The proportion of new-build houses, sold as leasehold, rose from 7% in 1995 to a peak of 15% in 2016”

Greeted with initial enthusiasm, the intention was to legislate against this, and to stop leaseholders from encountering problems, such as high service charges, excessive administrations, and high charges for leaseholder to extend the agreements.

In February 2017, the Housing White Paper titled – “Fixing our broken housing market”, was followed up the same year with a consultation paper titled – “Tackling unfair practices in the leasehold market”. Theresa May’s government promised to “prohibit the creation of new legislation to stop the creation of new residential long leases on houses, whether newly built or on existing freehold houses, other than in exceptional circumstances; restrict ground rents in new leases of houses and flats to a peppercorn value; address loopholes to improve transparency and fairness for leaseholders and freeholders”

In 2019 the government promised to “continue with our reforms to leasehold” in their manifesto, but nothing was published until 2020, when the Law Commission published 3 reports. January 2021 saw the announcement that legislation would be introduced to set future ground rents to zero.

January 2022 saw the consultation process opened on “Law Commission recommendations that would broaden access to enfranchisement (buying the freehold) and the ‘right to manage’ a building. The proposals would increase the ‘non-residential limit’ from 25% to 50%, allowing leaseholders in buildings with up to 50% non-residential floorspace, to buy their freehold or claim a right to manage.”

This legislation when it arrives (1st April 2023 has been suggested) will only apply to new lease agreements and not retrospectively and may not have any safeguards to those that are still facing significant charges for extending leases, or from increasing ground rent charges.