The government last week announced that leaseholders will be given the right to extend their lease by 990 years at zero ground rent.
This is the result of years of controversies around escalating ground rents – some contracts saw ground rents double every 10 years, which certainly adds up.
The principle of leaseholders contributing funds towards the freehold to pay for shared services isn’t necessarily a bad one, but unfortunately the greed of a few people and companies has ruined it for everyone else.
As a result of these changes commonhold is expected to become more typical for future purchases. This sees flat owners hold the freehold to their individual property. They then form a management group with the other residents, putting themselves in control of service charges.
To manage this change, the government is establishing a Commonhold Council, which will include leasehold groups and industry representatives. This will be designed to aid the widespread takeup of commonhold.
The changes from the government will begin to be rolled through parliament in Spring.
Since it seems the established leasehold-freehold relationship is being changed, I wonder how these alterations will take place.
How much will it cost to extend these leases? Will it be compulsory for leaseholders in blocks to become freeholders, so they can manage paying for their common areas?
I’m waiting to see how this transition works, but I’m pleased that something is being done.
Ryan Bembridge, Editor, PropertyWire
