Leasehold Plans

Housing minister Rachel MacLean has confirmed a bill to phase out some leaseholds in England and Wales will be included in the King’s Speech.

The speech on 7 November will set out government plans for the coming year.

Ministers have long-promised to change the controversial leasehold system, which has seen expensive fees imposed on homeowners.

The bill is expected to ban leaseholds for new houses, but not new flats.

The housing department estimates that there are almost 5 million leasehold homes in England – 70% of which are flats.

The proportion of new-build houses sold as leaseholds has fallen from a 15% high in 2016 to just 1% in December 2022.

Ms MacLean said the new bill would “restore true home ownership to millions of people and end the reign of rip off freeholders + incompetent profiteering management companies.”

She did not provide further details but posted a link to a piece, which said that following a consultation the government would cap all existing ground rents at a very low rate, known as a “peppercorn” rate. Ground rents for properties sold after June 2022 are already capped.

The article also said the government would change the standard contract lease extension from 90 years to 990 years.

When a leasehold flat or house is first sold, a lease is granted for a fixed period of time. People may extend their lease or buy the freehold, but this is often an expensive and lengthy process.

Labour’s shadow housing minister Matthew Pennycook dismissed the government’s plans, saying: “If this thin gruel is all we’re getting in the King’s Speech, leaseholders will have been failed.”

He said Labour would “fundamentally and comprehensively reform the leasehold system”.

Responding to the government’s plans, housing campaigner Harry Scoffin said the ban on leaseholds should be extended to include flats.

He said abolishing existing ground rents was a “radical” plan which would “slash” costs but added: “We need far more to liberate flat leaseholders”.

The new legislation is also expected to make it easier and cheaper for homeowners to extend their lease or buy a freehold.

It is expected to be introduced to Parliament before Christmas, however making changes to the property market can be complicated and the bill could face a tricky journey before becoming law.

Someone who owns a property outright, including the land it is built on, is a freeholder.

With a leasehold, the person owns a lease, which gives them the right to use the property. But they still have to get their landlord’s permission for any work or changes to their homes.

When a leasehold flat or house is first sold, a lease is granted for a fixed period of time, typically between 99 and 125 years – but sometimes up to 999 years. People may extend their lease or buy the freehold, but this can be complicated and expensive and involve legal fees.

Leasehold house owners are also often charged expensive ground rent as well as fees if they want to make changes to their homes. A leasehold house can also be difficult to sell.