On 7 January 2021 in a widely reported press release issued by the Ministry of Housing, Communities & Local Government, the Housing Secretary Robert Jenrick announced widespread intended changes to leasehold law.
In what is described as the first of seminal two-part reforming legislation in this Parliament, legislation to set future ground rents at zero will be brought forward in the upcoming session with further changes to follow. The measures are presented as ‘the biggest reforms to English property law for 40 years’ with the intention to make ‘home ownership fairer and more secure’. The proposals follow through from last year’s Law Commission recommendations on making enfranchisement cheaper and simpler.
Further changes include:
Consistent with its professed desire to reinvigorate commonhold, the government is to establish a Commonhold Council. This is to prepare homeowners and the market for its widespread take up. Since its introduction in 2003 (under the Commonhold and Leasehold Reform Act 2002) commonhold has failed to attract lasting interest in the real estate sector with fewer than 20 commonhold developments created since. Whether this will change now remains for debate.
The proposals are radical and will doubtless meet with strong resistance from landlords who stand to lose the most. This includes, of course, leaseholders who have already exercised their enfranchisement rights, acquired the freehold of their building and have become landlords.
The future ground rent abolition is likely to be implemented swiftly and in the ‘up and coming session of Parliament.’ The timing for enactment of the wider reforms remains unclear but with leasehold lhigh on the political agenda the government may wish to accelerate matters before the next general election. Whether than can be achieved in light of pressing issues on Brexit and COVID-19 remains to be seen.
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