Recently Michael Gove announced his support for leasehold reform. The government plans to make it easier for leaseholders to change their buildings into common ownership to avoid paying ground rents and management fees on their properties. The current leasehold system was said to be “unfair” and a “feudal system”.
With leasehold properties sometimes complexities can arise such as how the building will be managed and maintained, high ground rent and service charges and, but not limited to, understanding the different rights between freeholders and leaseholders. A recent reform was introduced last year which removed ground rent for new leases. However, high-ground rent is still an issue for older leases.
Leasehold properties are not an issue in their entirety. And can be beneficial to the extent that some leaseholders may not wish to be involved with the daily running of the block which includes having a budget in place for the maintenance block, insuring the block and/or dealing with general administration. Furthermore, certain rights are in place so that leaseholders can acquire the freehold or take over the management of the block. Therefore, there is a degree of flexibility with leasehold properties as not all need to agree with or participate in enfranchisement and right to manage claims.
In conclusion, for the government to suggest the leasehold system should be abolished is a bold statement. It will be interesting to see if such comments from the government will mean that people will be put off from purchasing a leasehold property. Our leasehold property system is not perfect and has its pros and cons. We will wait to see what the government proposes in the near future but they have a big task on their hands.
At Attwells Solicitors we work on a wide range of leasehold property matters and can advise further on different types of leasehold queries. For further information please call 02077 722 9898.