Law Commission publishes report on valuation in enfranchisement
8th January, 2020 Today the Law [glossary_exclude]Commission[/glossary_exclude] publishes its report on valuation in enfranchisement. The [glossary_exclude]Commission[/glossary_exclude] sets out options to...
Under the Leasehold Reform Act 1967 (‘the 1967 Act’) the owner of a leasehold house may be entitled to a lease extension of 50 years. In this case, there is no premium for a lease extension of a house.
However, the ground rent throughout the 50-year extension of the extended lease may increase to a modern ground rent. This modern ground rent would be assessed on the first day of the new lease and shall represent the letting value of the site.
A modern ground rent is usually much higher than the existing ground rent. Advice should be sought as to how much the new ground rent may increase prior to proceeding with the extension.
The Leasehold Reform (Ground Rent) Act 2022 came into force on 30 June 2022 and puts an end to ground rent for most new long residential leases in England and Wales.
From that date landlords of leases in most circumstances must not require a leaseholder to make a payment of ground rent.
However statutory lease extensions such as for houses under the 1967 Act remain unchanged.
With regards to a non-statutory (voluntary) lease extension, the new portion of the lease that extends beyond the date of the original term must only charge a peppercorn (that is, nil) ground rent. The ground rent charged on the balance of the term of the original lease must not exceed the original ground rent and a lower ground rent may be agreed for the balance of the original term.
More information you might find useful:
- UK and Welsh governments publish guidance on the Leasehold Reform (Ground Rent) Act 2022
- Houses – Qualification and Valuation
- More Frequently Asked Questions on Houses – Enfranchisement and Lease Extension
Still not found the answer?
Contact LEASE to have your enquiry dealt with by one of our experienced advisers