15 January 2021 | Comment | Article by Kathryn Cooling

New lease extension rights for residential leaseholders

On 7 January 2021, it was announced that changes to the rules relating to residential leaseholders in England will soon be delivered, which will give leaseholders the right to extend their leases by a maximum term of 990 years at zero ground rent.

Under the current rules, leaseholders of houses can only extend their lease once to add 50 years to their lease and with a ground rent. In comparison leaseholders of flats can already extend as often as they wish at a zero ‘peppercorn’ ground rent and for 90 years.

Legislation will be brought forward in the upcoming session of Parliament to allow both house and flat leaseholders to extend their lease to a new standard 990 years with a ground rent at zero. These reforms will apply, at this stage, to England only as the Welsh Government has not yet announced its response to the Law Commission’s report.

Leaseholders who choose to extend their lease on their home will no longer pay any ground rent to the freeholder, enabling them to fully own their home without any additional, unnecessary and unfair expenses.

In addition, the government will abolish prohibitive costs like ‘marriage value’ and set the calculation rates to ensure this is fairer, cheaper and more transparent.

The change in rules will certainly see a rise in leaseholders seeking to extend their leases.

If you are already in the process of extending your lease it may actually suit you to withdraw their current claim and pay wasted costs to date.  You can then wait 12 months and then make a fresh claim, at which point we expect the new rules to have come into force.

If you would like further information regarding extending your lease, please do not hesitate to get in touch with our Property Litigation department, where an experienced member of our team will be happy to assist.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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