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Leaseholders could ‘save thousands of pounds’ under new government reforms

The lease extension process and costs are set to change. But when and what does it mean for leasehold home buyers and owners today. And what should you do if you have already started the process or you are thinking of extending now? Should you pull out or wait?

Post updated: February 24th, 2021

5 minute read

lease extension process

The lease extension process is set to change, although we don’t know when.

Around 4.5 million leaseholders in England will be given a new right to extend their lease by 990 years at zero ground rent, under new reforms announced by the Government.

Retirement properties will be included under these changes, despite the government previously saying they would be excluded.

And the process of extending a lease is going to be simplified too. The cost to extend it will be determined by a government online calculator. This will make the process more transparent and removes the need for costly and time-consuming negotiations.  It is not clear yet whether a formal survey will be required.

For some leaseholders, these changes could save thousands, to tens of thousands of pounds, according to the Government.

However, a full timetable detailing when these measures will be put into force has yet to be set out. The Government has only just promised to introduce legislation and we fear that it could be delayed or watered down by the intense lobbying by freeholders who are set to lose out.  

How much could I save under new leasehold reforms?

Once these reforms have been brought in, there will be a cap on the ground rent that is due when you extend your lease and all future ground rent will be set at zero. This will come as a welcome relief to the many homeowners paying vast amounts in ground rent each year.

There could be other major savings will happen when you extend your lease too. Under the current system, extending your lease can be expensive and the amount you pay can be complicated. It will depend on factors like the value of the property, the number of years left on the lease and the annual ground rent charge. The amount you’ll pay is open to negotiation and at the moment it’s critical you get sound legal advice.

But under the new system, it should be cheaper and simpler for you to extend your lease. Previous costs such as ‘marriage value’, which is defined as the increase in property value once the lease has been extended, will be banned. And a new, standardised method of calculating the cost will lead to the creation of an online calculator. This means leaseholders will be easily able to see how much an extension to their lease will cost. It’ll also show you how much you can buy the freehold for too.

‘Good news for leaseholders – but we need to see the small print’

The news was cautiously welcomed by Paula Higgins, Chief Executive of the HomeOwners Alliance. ‘This is a step in the right direction for leaseholders and we welcome the decision to include retirement homes in these reforms,’ says Paula. ‘However we urge the Government to ensure that the online formula is simple and transparent and not stacked unfairly against the leaseholder.

‘What we need now is a clear timetable to set out when all these changes will come into effect,’ she adds. ‘We don’t want this to drag on for years, leaving leaseholders in limbo. It could mean them potentially losing out financially as they wait and wait for new rules to come in.

‘And it’s also important to recognise it’s only one step in addressing the unfair and feudal leasehold system which we want to ultimately see dismantled,’ she adds.

I’m planning to extend my lease now, should I wait?

In light of this news, many leaseholders may wish to put off extending their lease but it may take several months or even years for legislation to come into force.

However, there are some circumstances in which you may still need to extend it. For example if you’re thinking of selling your property. Buyers won’t be able to get a mortgage if the lease term on your property is too low.

And if you are planning to stay put and you are below 70 years, you will not be able to find a competitive mortgage deal. Below 60 years and you won’t be able to remortgage.

If you have a lease that is longer than 80 years, the premium you pay for the lease extension may not change that much as you aren’t liable for the marriage value premium which is being abolished.

However if your lease is below 80 years, you could save substantial sums of money, but this could be a risky strategy. The longer you wait, and if the reforms are not introduced in time, you will need to pay more. Every year below 80 years can cost leaseholders hundreds, if not thousands of pounds.

If you’re considering extending your lease, it’s essential to take good legal advice.

Are you thinking of extending your lease? Our lease extension solicitor partner can give you a free estimate and provide advice you can rely on. Find out more and speak to them today

I’m currently buying a leasehold property, what should I do?

While the changes have yet to come into force, if you’re buying a leasehold property you may still be able to use them to your advantage. If you are buying a new build, you should insist that your lease is 990 years and that the ground rent should be set to zero.   Your solicitor should be able to argue that if these are due to be banned, it’s not reasonable for you to buy a property that that includes them.

If you are buying an existing leasehold property, you may be able to negotiate on the price as other buyers have been put off buying leasehold.  If the property has a long lease, you will get the advantage of a cheaper leasehold extension when the new rules are in place.

I’m in the process of extending my leasehold. Can I put it on hold until the new changes come in?

If you have begun the formal (or statutory) route to extend your lease, then the answer is no. You cannot put a temporary hold on the process. You have a simple choice. Carry on or withdraw.

If you are using the informal or negotiated method, it may very well be possible to agree a temporary delay with your freeholder – but this is at their discretion, and they can change their mind at any time.

And also, that marriage value should be taken out of the future calculations for a lease extension, instead of waiting for the new rules to come in.

Is it still worth buying the freehold?

The new changes certainly make owning a leasehold property more attractive. However, there are still benefits of owning the freehold. For example, if you’re a leaseholder you’ll still need to pay your freeholder’s costs for the maintenance of the building. And you’ll also need to seek permission from the freeholder if you want to undertake any major works on your home.

Are you a leaseholder? How do these new changes impact you? Tell us in the comments below


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  1. Dee FisherDee Fisher

    69 years remaining need to extend but about 20k plus just for a bit of paper to stay in flat i bought 20 years ago. My solicitor did not tell me this would need extending at the time this came as a shock. Would have not even purchased this place had I known. Absolute racket overdue for reform soon. Outrageous.

  2. Philip falconerPhilip falconer

    Hello,
    I have lived at my maisonette for 33 years and now my wife has passed away I wish to sell but my lease is 55 years,I live in Rayleigh and the landlord is in London and quoting £46000 for a further 44 years,
    He will not answer any letters to confirm he will negotiate with a buyer-help!

  3. Janet LJanet L

    I began the statutory process for lease extension prior last year. The cost has been agreed with the landlord and I was made aware that I had to pay the landlords reasonable legal costs and factored that in alongside my own legal costs and surveyor costs. Once the process started the management company, Atlantis Estates, a co signatory to the lease informed me that I must pay them £598 plus VAT for their signature. No one advised me of this and as the lease has been agreed under the same terms and imposes no greater burden on the management company than in the existing lease. They are now refusing to execute the Elena se extension before paying the £598 plus VAT sum. Is this fair? Can they not accept that the landlord lawyers have agreed everything is ok?

  4. EveEve

    Hello, I am near to get a maisonette flat in detached house with lease of 992 years. It is the first floor. The agency saying that this is like share of freehold. But my concern is because we have a loft and we want build a proper loft rooms what we need to do in this case or can we build?
    The house are only two flats located ground and top floor and everyone have their own garden. Thank you

  5. Joanne JonesJoanne Jones

    Hi, my daughter has just had an offer accepted on a leasehold Apartment with 66 yrs lease. We are unsure whether to hold on and await reform changes and take risk or whether we get her solicitor to negotiate on current extension price as they might be willing to give a better price which will allow her to spend more on the refurbishment. Kind regards

  6. Russell HouchinRussell Houchin

    Two issues: Why is Commonhold not in this discussion and why are Finance UK members (formerly CML) creating their own CPI index linked continuation of leaseholds in order to bully resale buyers into a mortgage contract which is likely not to last beyond the 25 year Ground Rent Review doubling the Ground Rent each time? I can see this becoming a PPI claim scenario all over again especially as Leasehold reform is current government policy and Finance UK manipulations with one strong freeholder bullying the single property buyer and at this stage is clearly an issue that will become highlighted when grossly unfair ‘mis-selling’ claims arise – as they surely will.

  7. dyanadyana

    I have applied for equity release to pay off my interest only mortgage but do not qualify unless I extend my lease. The freeholder of the property is the local council and have demanded £32,000.00 to extend the 58 year lease, on my one bedroom maisonette.
    The only way I can pay this amount is to increase the equity release.
    The interest rate is extortionate!
    Is there another option?

  8. Abby EchaveAbby Echave

    I have bought a new-built flat in new development that is due to finish in four years and moved in 4 months ago. I moved into the first block of 50 apartments that have been completed. I have recently been notified that the future apartments currently being built will no longer be charged ground rent, whereas those in the first block still have to. This will lead to my property value depreciating due to the unwanted ground rent payment in comparison to the rest of the properties around. Why are we being discriminated when we belong in the same development? Unfair.

  9. MarkMark

    I am afraid ex council leasholders would not qualify for this scheme. Just rang the council they said no, shame , Hope they revise their decision.

  10. Eliot daveyEliot davey

    I purchased my flat with a freehold.It comprises of 8 flat complex,I’m unsure if the other 7 have free holds,but one has been put on the market last week with no freehold just leasehold,so I am wondering is my freehold is legal if something unfortunate happened to my flat,I have insurance?

  11. Damon GibbonsDamon Gibbons

    I have a 50% share in my shared ownership flat in a block of 12 flats. My lease is currently at 83 years left, I was about to exstend the lease by 90 years, should I go ahead or wait for the new reforms to happen I am not planning to sell, but would like your advice as what I should do.
    yours sincerely Damon Gibbons

  12. Billy youngBilly young

    Our freeholder, who also owns the ground floor flat of the purpose built maisonette ( we own the first floor) has sold or transferred the freehold without first right of refusal to us. As only 2 flats we do not qualify as a majority group to buy the freehold. The maintenance and services company now holding the freehold have a poor review and appalling rip off reputation online and so we await our fate with new charges for services which will be 1000% + above our low annual ground rent. We are also shocked to discover we do not own the loft space which is only accessible from within our own flat! The new services company, reportedly online by other flat owners, has bought leases on some of these lofts! We are also due to extend our lease from 89 years and don’t know whether to wait until the law changes for 999 years lease or spend around £10k with all fees and costs to increase by another 90 years……or sell the flat we have enjoyed refurbishing for the last 2 years. This whole mess has opened our eyes to the absolute pressure and stress, mental and financial, that owning a leasehold property puts on people. Our lives are devastated and my dream of retiring at 70 is now not possible. My advice to others is to buy a house and leave flats well alone….. Or live in a tent and pay a farmer a welcomed income to reside in one of their fields.

  13. Noel BrasseyNoel Brassey

    We purchased a 1 bed flat in Rugby in 0ctober 2015 for £79000. At the time it had 73 years remaining on the lease which we were led to believe, by agents and solicitors that 73 years was a decent amount of years left to run. We have since found out that if we wanted to sell the property it would be unsaleable to any buyer needing a mortgage and only those with cash, mainly investors who would probably offer below what we paid for it, £60,000 was 1 offer.

    I enquired to extend the lease direct with the freeholder who quoted me £20,000, I didnt ask what term the lease would be extended by as I considered this to be an exhorbitant amount. I have since instructed a surveyor and soliciitor and after some discussion and an offer of £8,340 which the freeholder rejected. I have not made any further offers. I have since been advised by solicitor/surveyor to await the new legislation on freehold properties, currently on its way through parliament.

    My main concern is that if this new law takes “years” I will end up paying more in extension and legal fees and wondered if it is worth taking my case to the 1st Tier Tribunal, or would this be even more costly?

    Thank you

  14. AngelaAngela

    I am ecstatic to hear this news. I have been fleeced by the freeholder who ignored my pleas to buy freehold and a management company who charge thousands of £s for buildings insurance and service and maintenance fees and don’t do anything. The ground rent is £250 pa all this has made it difficult to sell the property, as people don’t understand the reason for such high charges. I’ve been waiting for over 25 years for these reforms, I can start breathing a sigh of relief !!!

  15. alan chambersalan chambers

    We bought leasehold Jan 2016 so the lease at present has 995 yrs left.
    When the changes are enacted, will it be possible to extend back to 999yrs & thereby abolishing ground rent?

  16. TracieTracie

    I have been following these reforms for 3 years this is longed for announcement. I have only a short lease on my property currently I am trapped as I cannot afford to sell. But these reforms will help as long as they help the leaseholders and the extension costs are reasonable and you don’t have to pay the legal fees of the freeholder too when extending. It needs to be fair this I have yet to see and the Government need to push it through Parliament quickly and us leaseholders not to have to wait another 3 years.

  17. Keith ForbesKeith Forbes

    Good news for some, but perhaps not all leaseholders, such as those in Eastbourne’s Sovereign Harbour where the great majority of homes – about 2,800 of the 3,400 – are leasehold flats. Why not? Perhaps Homeowners Alliance can help. Presently, all Sovereign Harbour flats pay not just a Rentcharge but a unique and expensive annual estate rentcharge
    and I have been informed, hopefully wrongly, that those paying an annual estate Rentcharge
    are not covered by the upcoming new legislation to advantage leaseholders.

  18. James SmithJames Smith

    Will these changes also apply to high rise buildings, e.g., Crown Heights in Basingstoke?

  19. W MarklandW Markland

    Having already commented. Just wish to add. Our landlord only extends by 149 years I believe. Original lease was 99 years starting in 1976. And every time a new person moves into one of his houses on our estate. He changes the terms, puts up the ground rent and insists they pay the house insurance he chooses. It’s all wrong. Thing is we are moving into a new build (a freehold). But know we are going to pay a maintenance charge for the estate. Having read about these also. Seen where people get demands for money but nobody comes to do the maintenance? Is this the new scam to replace the leasehold one?

  20. ZainaZaina

    I am currently in the process of extending my lease currently 94 years left but they are only allowing 90 years extra at £2300 premium. They are not offering 999 years. I am paying their legal fees but they want me to have my own solicitors when the solicitor fee I a, paying for theirs could just do my side also to save on costs because the additional costs just make it so expensive. Legal fees nearly more than the premium I am asked to pay.

  21. Gary schwartzGary schwartz

    I have 70.21 years left on my lease the freeholder made me an offer £17500 plus fees to extend to 125yrs should I take that?

  22. Laraine StromLaraine Strom

    I hope it comes into law. I have got about 62 years left on my lease. The Freeholder and the management company quoted £150,000 to buy the Freehold, and that depends on whether they are willing to sell it. I can’t afford that. Don’t get me started on the Building Insurance. They charge £1,000 for normal building insurance. Both the Management company and the Freeholder are crooks.

  23. Michelle SeniorMichelle Senior

    I was not advised correctly by my solicitor and unfortunately the older tenants and Equity housing didn’t even look at the house to check it. Shared ownership, worst investment ever.. £30.000 deposit and spent £1000 s on it making it liveable.. £142 amth and going up not down, lve put new kitchen in, boiler, fenced front and back. Plastered all rooms again properly and redecorated.. new doors and desperate for new bathroom. House in this area getting worse due to letting £50.000 .. sold, that’s me loosing a lot of money and Equity housing laughing all the way to the bank
    Been in this house since 2012, trapped with a boiler to pay for and a house to finish and sell the legal way .

  24. W MarklandW Markland

    We decided we wanted to move a few years ago. We had a leasehold property. With only 55 years left on the lease. Didn’t realise what impact this had. Decided to look into buying the freehold. Our landlord has the reputation of ignoring anyone who wanted to buy the freehold. It took a solicitor to serve notice for him to acknowledge us. We then had to get a surveyor involved. Please note if anyone is going through this process ensure your surveyor is an expert in these matters. Not all surveyors understand this process. Our first surveyor quoted £25,000 to just extend the lease. We were advised that could be incorrect and sought a second opinion. Thankfully the second surveyor knew what he was talking about. The purchase, not the extension, cost was less than half the value the first surveyor quoted for the extension. This included all legal fees. So a lot less money than we thought. The whole process took over a year. We purchased the freehold reversion March 2020.

  25. maureen staleymaureen staley

    I am ecstatic to hear this news but sadly it will not give me any benefit as my retirement property lease is 90 years currently & ground rent £600pa. I cannot wait until this leasehold business is removed entirely for a fairer system where the money i paid for my retirement home means i own it… not the freeholder who appoints a management company who also fleece us

  26. Carol HanlonCarol Hanlon

    I am very pleased to hear this news for others but devastated that I have just renewed my lease and it cost thousands! Do you think there could be a chance of remuneration for people like me who have only just completed their renewal?

  27. DeirdreDeirdre

    I look forward to the changes as my lease is below 80 years. I was quoted £32,000 to extend in December but didn’t go ahead as that is excessive. It cost me £850 before the freeholder would give me that information. They are absolute thieves.

  28. VictorVictor

    How does the leasehold change affect the property if you are planning to extend your property?

    Victor

  29. Khatija Binte -AdamKhatija Binte -Adam

    My concerns have been with property management services employed by landlords. Overcharging and doing nothing.
    When are the new legislation going to be introduced by the government? 20 years time? When I’m long gone.
    Pressure should be applied to speed these up and do away with feudalism.

  30. Elinor GoldElinor Gold

    My property is leasehold, I have it on the market but cant sell it.

  31. MartinMartin

    Too late for us we extended or lease about 4 years ago. I also voice the opinion, do not leave shared ownership out of the reforms. This is because shared ownership do not own nothing in regards to the lease. Fortunately or unfortunately we extended out lease a few years ago and brought the other 50% of the shared ownership property at the same time. This was because the housing association wanted the whole 100% of the lease costs, even though we didn’t own the whole property and none of the lease, we owned 50% of the property at the time.

  32. F LopesF Lopes

    I own an ex council property does the lease changes apply to my property as well?
    Thank you

  33. Christine AldridgeChristine Aldridge

    Hi. Good news for some, but what about shared ownership we are being overlooked again, when will the Government recognise that we exist? We are a complex of 36 flats, the first in the country to be shared ownership we have been the guinea pigs, it would be virtually impossible for everyone to buy the freehold which seems to be the main subject of this government proposal.

  34. Nicki jenningsNicki jennings

    I’m in the process of buying a shared ownership property that will in time need the lease extended. Will these new changes include SO properties?

  35. Owen DaviesOwen Davies

    I live in Wales and am hopeful this will be matched here too. Has anyone heard anything? My ground rent is £125 a year but with a service charge that has jumped by £50 a month to £133 a month in 5 years if the ground rent were abolished it would be a huge help. I really feel the Leasehold Sector and related Property Management Companies need better regulation. I had to contact a lawyer for 15 minutes of free legal advice at the Leasehold Advisory Service just to force the property management company to fix some vents that rats were getting into our building through. It was ridiculous.

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