Government commits to further leasehold reform â€œwithin this Parliamentâ€Â
The Ground Rent Act will come into force on 30 June 2022
The Association of Leasehold Enfranchisement Practitioners (ALEP) has received an update from government on its intended programme of leasehold enfranchisement reform, which makes a commitment to further reforms “within this Parliament”.
Lord Greenhalgh, Minister of State at the Department for Levelling Up, Housing and Communities, wrote a letter on 13 June which reiterated the aim of making home ownership “cheaper, fairer and more secure”. He assured ALEP that the government is committed to delivering the second phase of its two-part leasehold reform within this parliament.
The first phase, the Ground Rent Act, will come into force on 30 June 2022. The Act will effectively abolish ground rents on new leases of houses and flats.
Lord Greenhalgh advised that the second phase of reform will focus on simplifying valuation, including the abolition of marriage value and introduction of prescribed rates for the calculation of market value. An online calculator will also be introduced, with the general aim of ensuring “standardisation and fairness”.
Mark Chick, director of ALEP, said: “As an Association we were delighted to receive Lord Greenhalgh’s letter of 13 June 2022 updating us in relation to our request for further information about the Government’s likely programme of reform”.
Chick added: “The changes that are being proposed were discussed in the Law Commission’s reports (published July 2020) and will no doubt be the subject of vigorous debate given the highly political nature of the recommendations.
“Making the statutory lease extension term 990 years (rather than 90 years) in addition to the existing term can likely be dealt with by amendments to existing legislation, so there is a very good chance that new legislation to deal with this aspect will come before parliament ahead of the next election in May 2024”, explained Chick.
“The proposed reforms would mean significant changes to the way that leasehold work is dealt with, particularly as regards valuation. It remains to be seen what the level of backing there may be in Parliament for such legislation, given that the reforms would involve a significant shift in economic benefit from freeholders to leaseholders. Indeed, it is interesting that Lord Greenhalgh’s letter refers to ensuring that sufficient compensation would be paid to landlords, no doubt to anticipate the possibility of a Human Rights Act challenge.
“ALEP is delighted to be consulted and responded to directly in relation to the Government’s proposals and continues to engage with the government on leasehold and commonhold reform. We anticipate a lively debate in the months ahead”, he concluded.