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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.

4 minute read

lease extension process

The lease extension process is set to change.

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.

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 in the next session and we fear that it could be delayed by other legislative pressures and the intense lobbying expected by freeholders who are set to lose out.  

How much could I save under new leasehold reforms?

Once these reforms have been brought in, if you extend your lease, your 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.

But the 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 and the number of years left on the lease. 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 until these reforms come into force.

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

If you’re considering extending your lease, it’s essential to take good legal advice; if you have a short lease (approaching 80 years or below) it’s particularly important. Every month below 80 years can cost leaseholder a lot of money.

Are you thinking of extending your lease in the next year? 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. You should insist that you don’t need to pay ground rent. 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. Your solicitor should be able to argue that if these are due to be banned, it’s not reasonable for you to sign a lease that includes them.

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

Leave a comment (22)* Required

  1. 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 !!!

  2. 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?

  3. 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.

  4. 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.

  5. 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?

  6. 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.

  7. 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?

  8. 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.

  9. 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 .

  10. 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.

  11. 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

  12. 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?

  13. 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.

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


  15. 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.

  16. 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.

  17. 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.

  18. 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?

  19. 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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