28 July 2017 by Sarah Goodall

Leasehold Reform – Tackling Unfair Practices

The Government this week announced a consultation on “Tackling Unfair Practices in the Leasehold Market”.

Press coverage on leasehold property has been steadily growing over the last few months and following lobbying and various protests it seems the government is taking action. In the consultation paper they are proposing changes to the law about which they are inviting comment.

The most notable proposed change is to ban the sale of new-build leasehold houses. Leasehold has always been the common way to “own” a flat or apartment. Many see no legitimacy in the need for new houses to be sold as leasehold instead of the established freehold way of ownership. Many argue this is simply a money making exercise for developers though others contend that there are legitimate cases where leasehold is a more favourable option.

The government also seek to restrict ground rent in new leases. Those supporting this proposal rely on exceptional cases where ground rent (payable by a leaseholder to a freeholder in recognition of the freeholder’s continued ownership of the land) can escalate to perceived unmanageable levels throughout the term of the lease. Opposers argue that  premiums are also usually lower as a result of ground rent clauses and both parties enter into the transaction being aware of the consequences.

It is important to note that owning leasehold houses and the paying of increasing ground rent have existed for many years it is not therefore a new development. The government, it appears, in announcing this consultation are seeking to tackle the few extreme cases.

It is vital that any action by the government to tackle those cases should not unfairly prejudice both freeholders and tenants who have willingly entered into legitimate transactions with the benefit of full and frank legal advice. The government is urged to ensure that the implementation of any proposals minimises the disruption to existing and largely harmonious leasehold ownership.

 Anyone with an interest or an opinion, whether you are a landlord or a tenant, should take this opportunity to have their say and you can do so by viewing and responding to the consultation here:

If any of our clients are concerned about the contents of the paper or require advice in that respect please do not hesitate to contact us on 020 7288 4700.

You can contact one of our other solicitors in the Enfranchisement team here.

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