Leasehold reform 2023

Edward Green, specialist leasehold and enfranchisement solicitor, takes a look at the changes being considered as part of leasehold reform in 2023.

Broadly speaking, the reform already introduced by the Leasehold Reform (Ground Rent) Act 2022 is limited to prohibiting the charging of ground rent on long residential leases.

What changes could be considered for 2023 leasehold reform?

The second phase of the Government’s leasehold reform package, amongst other things, aims to:

• Reform the process of enfranchisement valuation used to calculate the cost of extending a lease or buying the freehold.
• Abolish marriage value.
• Cap the treatment of ground rents at 0.1% of the freehold value and prescribe rates for the calculations at market value. An online calculator will simplify and standardise the process of enfranchisement.
• Give leaseholders of flats and houses the same right to extend their lease agreements as often as they wish, at zero ground rent, for a term of 990 years.
• Enable leaseholders, where they already have a long lease, to buy out the ground rent without having to extend the lease term.

Leasehold reform in 2023?

On 23 June 2022, Eddie Hughes MP outlined that the Government was committed to introducing further leasehold reform in the "next parliamentary session". Parliamentary sessions generally run from spring to spring. Therefore, leasehold reform legislation is expected in the 2023-24 parliamentary session.

That said, we have not seen any Government Bills (a formal proposal for a new law) put forward by the government in respect of further leasehold reform yet. Given it took over a year from the first reading of the Act for it to come into force, we could be waiting longer than expected for further leasehold reform.

Therefore, if you have short lease but are waiting for reform to be introduced, it may be worth extending your lease now given the uncertainty around the timetable of further reform. The lease is a depreciating asset; the cost of extending your lease will increase the shorter the lease term gets.

Holmes & Hills has a specialist team of lease extension solicitors who can advise on leasehold reform and leasehold properties. If you are thinking of extending your lease or need specialist advice, please get in touch.