Navigating UK law and proposed changes.
Extending your lease term makes it more attractive to potential buyers and lenders (should you wish to mortgage or remortgage).
For property owners considering extending their leases using the statutory process, understanding the current UK legal landscape and upcoming changes and their financial implications is crucial.
Current UK law
The Leasehold Reform Housing and Urban Development Act 1993 grants leaseholders the right to extend their leases (subject to eligibility criteria, including having owned the property for two years). The extension allows 90 years on top of the existing lease term, and it reduces the ground rent to a peppercorn (essentially £0).
Proposed changes
The Government proposed the Leasehold and Freehold Reform Bill to Parliament on 27 November 2023 and it is currently being debated. key changes include:
- Increasing the extension term from 90 years to 990 years.
- Removal of the so called ‘marriage value’, which makes it more expensive to extend leases when there are 80 years or fewer left on the lease.
- Removal of the 2-year ownership requirement.
Timing considerations
Given these potential changes, it is essential for leaseholders to evaluate whether waiting for updated legislation is possible and if so whether it will be advantageous. In most cases, the proposals will be beneficial for those leaseholders who can wait to see if they become law. Not all leaseholders, however, will have that luxury, particularly if they are looking to sell the property or (re)mortgage it.
There is, however, no certainty that all the proposals will become law nor when that will happen. With a planned General Election within a year, a change in Government may also change the legislative priorities.
Professional guidance
If there is no urgency to extend your lease, then it may be advantageous to delay. Navigating lease extensions in the evolving legal landscape can be complex though and one size does not fit all. You should seek advice from legal and valuation professionals to gain insights tailored to your situation.
If you need assistance with understanding lease extensions or the potential impacts of forthcoming changes in UK legislation, our team is ready to lend a hand. Don’t hesitate to contact us at 01202 881454 or via email at enquiries@hgwlaker.co.uk for personalised advice and support tailored to your circumstances.
We have offices in Wimborne, Broadstone, Christchurch, and Verwood, however, our legal team extends its coverage to include:
- Bournemouth,
- Poole,
- Corfe Mullen,
- Creekmoor,
- Upton,
- Canford Heath,
- Bearwood,
- Blandford,
- Ringwood,
- New Forest,
- Ferndown,
- Three Legged Cross,
- Aderholt,
- Wareham,
- Weymouth.