Following the consultation in summer 2017 on ground rents and leasehold houses (read our blog here) the government has published its response (read it in full here) with the following headline proposals:
A ban on granting new residential long leases of houses, other than in exceptional circumstances
This currently only affects new leases, but the government will consult on allowing existing leaseholder houseowners to buy the freehold or extend their leases on more favourable terms.
The legislation will contain exemptions. Developers who only have an existing leasehold interest will continue to be able to build and sell leasehold houses on that land. The government will consider other specific exemptions when the legislation is brought forward.
The government will consider introducing a right of first refusal for house lessees and aims to bring forward a solution in summer 2018.
Ground rents on new leases of houses and flats will be set at zero
There are no specific proposals to tackle existing onerous ground rents, but the government will consider measures in future if necessary.
The response also confirms the government is committed to professionalising managing agents, tackling unfair service charges, and modernising the home buying process. The government will also try and reinvigorate commonhold (as an alternative to leasehold flats).
The next stage is for draft legislation to be brought before Parliament, at which point it will be closely scrutinised. It will be interesting to see what definitions and specific exemptions are proposed, and in particular how these might impact on existing developments.
While Parliamentary time is particularly tight due to Brexit, given the high profile of leasehold reform we expect the government to treat this legislation as a priority.
