The Government has laid out a number of measures to reform the leasehold system. These are;
- Abolish ground rent on new leases.
- Extend leases to 990 years.
- Abolish marriage value and cap ground rent value.
- Lease extension valuations to be carried out online.
Numbers 1 and 2 will take place during the next parliamentary session which begins in the Spring. The legislation will need to be voted through but there is no detail on actaul dates of implementaion.
There have been no dates or timescales given for Nos 3 and 4 above.
These are issues that have been under debate for years and clearly there have been some injustices arising as a result particularly of the behaviour of some developers and freeholders.
At the moment there is very little flesh on the bones of the proposals, consequently assessing the impact on values is not possible.
There are one or two certainties
(a) the government will come under significant pressure from its major funders to limit the damage to their investments and a number of their own MPs will be very exercised by the proposals,
(b) the legislation will inevitably take far longer to reach the statute book than the the press are indicating.
If you are currently undergoing a lease extension the following needs to be taken into account in assessing the merits/demerits of the way forward:-
- The costs of the exercise may have been spent and cannot be avoided. Thus the fees on valuation, legal work and possibly negotiation may have been incurred and cannot be recovered. In addition the professional charges incurred by the freeholder fall to the leaseholder and will also need to be paid if the lease extension application is withdrawn.
- If your notice were to be withdrawn the present legislation stipulates that you must wait a further 12 months from withdrawal before you can start again.
- At the moment it is impossible to properly assess what if any saving there may be on the agreed premium.
In conclusion if you withdraw from the process then you will have the costs to pay and you will have to wait 12 months to start again, there is also no certainty as to when the beneficial aspects i.e Nos 3 and 4 will come into legislation. The legislation has yet to be voted through so there is still a lot of uncertainty.
If you would like to discuss your particualr case please call Simon Brook on 01903 890 666.