Labour’s manifesto promised to make some serious reforms to the legislation around leasehold, and the recent Kings Speech helped to shed some light on exactly what the new government is gearing up to do on this issue.
With freehold property, one owns the property and land it sits on for an infinite amount of time – this is usually a house. With leasehold property, one only owns the property (not the land) and only for a set number of years – typically between 99 and 125 - and owes obligations to their freeholder. These obligations include paying expensive grounds rent or service charges. Leaseholds are often touted as a ‘feudal system’ because of this, which Labour’s manifesto has pledged to bring an end to.
As a result, Labour has said that they will plan to extend even further the Leasehold and Freehold Reform Act 2024, which was passed under the previous government.
So, what are labour’s plans to tackle the issues associated with leasehold property? Well, a lot of the reforms they wish to put in place are based on recommendations made by the law commission on the leasehold system.
First of all, they would like to revive the commonhold system of ownership through the establishment of a new legal framework. Commonhold is an alternative to leasehold ownership of flats and other buildings that share communal areas. Labour is also planning to ban the sale of new leasehold flats, so that commonhold becomes the ‘default tenure’.
Second of all, Labour wants to deal with the issue of unaffordable and high ground rents and put an end to the threat of forfeiture so that leaseholders are not put at risk of losing their home due to the onerous debts that they are forced to pay in accordance with the terms of the lease.
It is not known exactly when the ‘feudal’ system of leasehold ownership will be officially brought to an end, so it’s important to keep an eye out for any news or updates relating to this.
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