Government consults on implementing reforms to leasehold

October 2018

In July 2017, the Government published its consultation paper ‘Tackling unfair practices in the leasehold market’ (see LEASE response). Over 6,000 responses were received and the Government subsequently published its full response to the consultation in December 2017 where it announced its planned measures including:

• Legislating to prevent the sale of new build leasehold houses except where necessary such as shared ownership.
• Making certain that ground rents on new long leases – for both houses and flats – are set at zero.
• Working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease much easier, faster and cheaper.
• Providing leaseholders with clear support on the various routes to redress available to them.
• A wider internal review of the support and advice to leaseholders to make sure it is fit for purpose in this new legislative and regulatory environment.
• Making sure freeholders have equivalent rights to leaseholders to challenge unfair service charges.

Government is now seeking views on:

1. Implementing the ban on the unjustified use of leasehold in new build houses
   • Whether respondents agree with proposed exemptions to the proposed ban on the granting of unjustified new residential long leases on houses, and what other exceptional circumstances there may be where it is impossible to provide a house on a freehold basis; and
   • Seeking views on how the ban should be enforced and implemented.
2. Implementing the reduction of future ground rents to a nominal financial value
   • Whether there are justifiable reasons why ground rents on newly created residential long leases should not be set at a rate of £10 per annum and the extent and application of the policy.
3. Implementing measures to ensure that the charges that freeholders must pay towards the maintenance of communal areas are fairer and more transparent
   • How to give freeholders an equivalent right to leaseholders so they can challenge the reasonableness of service charges levied through a deed of covenant or an estate rent charge;
   • Whether there are any justifiable reasons why freeholders should not have a mechanism to change the provider of the services covered by a deed of covenant or an estate rent charge. In particular whether a right to apply to the tribunal to appoint a new manager is appropriate; and
   • What the impact of these changes would be on companies or bodies that provide the long term management of communal areas and facilities.
4. Implementing measures to improve how leasehold properties are sold
   • What a reasonable deadline would be for managing agents and freeholders to provide leasehold information; and
   • What maximum fees would be reasonable for managing agents and freeholders to charge for providing leasehold information.

   All responses to the consultation should be submitted no later than midnight on 26 November. The Government is encouraging respondents to use their online survey, although written responses can also be emailed to:

   leasehold.reform@communities.gov.uk or sent to:

   Leasehold, Commonhold and Rentcharges Division
   Ministry of Housing, Communities and Local Government
   Third Floor, South West – Fry Building
   2 Marsham Street
   London
   SW1P 4DF