Leasehold property ownership has always been a source of anguish for a lot of people. This is because many of these people are locked in expensive leasehold agreements and contracts with unfavourable terms. With this understanding, homeowners called on the government to implement reforms that could help ease their pain. The proposals are here but there is one problem; experts are warning these reforms could take years to implement.
Expert Opinions
Belinda Walkinshaw, the managing partner of Leasehold Law, which has been on the forefront in fighting for the reforms, says that leasehold reform is a very complex process. She also says that she expects it will be a few years before the recommendations put forward are enacted into law. Furthermore, she adds that there is no guarantee that the reforms required to “make the property market fair for leaseholders” will materialise at the end of the reform process.
The only thing leaseholders can do, she adds, is to urge the government to fulfil its promise of making it easier, faster and cheaper for people to extend their leases or purchase leasehold property. Failure to do this, or if the process takes too long, will hurt the leaseholders these reforms are meant to protect.
Strengthening Leaseholders’ Rights
There are several recommendations that Leasehold Law believes would help reinforce leaseholders’ rights. The first recommendation is getting rid of the requirement for leaseholders to have owned their flat two years before applying to purchase freehold. Doing this ensures that leaseholders can purchase freehold as soon as they can, which eliminates the chance of the freeholder selling the property to other investors before the leaseholder can get a chance to purchase it.
Next, the term of a leasehold should be increased from 90 years to 990 years. Leasehold Law believes that doing this will eliminate the expenses incurred when leaseholders renew shorter leases.
Third, buying out the ground rent should be made an option as it provides an alternative to paying for an expensive lease extension. Doing this also lightens the leaseholder’s burden of paying ground rent, especially in cases where thy have long leases and do not require an extension but they still have heavy ground rent provision obligations.
What Can Leaseholders Do?
If you have a lease that is nearing 80 years, you should renew it now without waiting for the reforms to come into place. There are no guarantees that the report will become law, and if you wait, your lease term might fall below 80 years and you will be forced to pay for an expensive extension anyway.
There is no need to panic because companies like Deacon believe that the current system can still work well. This conclusion was drawn from talking to satisfied resident management companies and a multitude of property management companies. However, for this to happen, there needs to be goodwill and cooperation from all sides as well as a lot of hours put in by volunteers made of leaseholders who would serve as officers and directors of resident management companies.
Although the reforms in the report release go some way in giving leaseholders some relief, experts say to continue honouring your obligations and carrying on as usual as it will be years before they become law. If and when these reforms are enacted into law, then leaseholders can move onto the new arrangement and from under a system that seems to do everything it can to oppress them.