SHW is advising leaseholders not to wait to extend their lease, following the start of the Government’s rollout of leasehold reforms.
Marie Bultitude, Associate at SHW, who specialises in Leasehold Enfranchisement, says: “Whether you have a one bed flat, a leasehold house, or a large portfolio, now is the time to extend your short leases as we have no certainty as to when further leasehold reforms will come into place.”
“With every year that passes, your lease diminishes and so does its value, so don’t delay in obtaining expert advice on how much it will cost you to enfranchise.”
The Leasehold Reform (Ground Rent) Act 2022 came into force on 30 June 2022, with all new leases granted after this date commanding zero ground rent. “However, this is the only policy that has officially been put in place so far, surrounding leasehold reforms,” Marie explains.
The newly appointed Housing Minister in February, Rachel Maclean, is the sixth Minister to hold this role within a year and with this level of instability within Government, further delays in leasehold reform seem likely.
Interestingly, Marie has already noticed an impact for landlords who invest in freehold interests. Those agreeing informal lease extensions are now unable to charge ground rent on the extended term, which means landlords are concerned for the value of their investments for future generations.
Michael Gove commented this month that despite speculation, he will not be abolishing the leasehold system, but will reassess the process to enable leaseholders to extend their lease through a ‘simpler and cheaper’ process.
Marie says: “One of the big questions is how the government will create their proposed online calculator to ensure one size fits all. Enfranchisement is an ever-changing area and it makes a lot of sense to gain advice to save time and money. Another key question is how the government will compensate freeholders in the calculation for the removal of marriage value. But until further announcements, it’s business as usual, so don’t delay in finding out your options as they stand now.”