The government has announced its latest plans to end the sale of new leasehold flats in England and Wales.
Sweeping changes to the leasehold system have been on the horizon for some time, with campaigners urging the government to act over spiralling ground rent and maintenance charges.
Under the current leasehold system, third-party landlords or freeholders, own the building and a leaseholder buys the right to occupy a flat within that building for a fixed period.
The government says it wants to move to a system of home ownership that is more in line with the rest of the world, known as commonhold, where homeowners own a share of and have control over the buildings they live in.
In response to these latest proposals, Natalie Bradley, partner at Stephensons said:
“Leasehold is an effective way of managing large developments but there does need to be some changes to rid of us of many problematic areas. Ground rents, the loophole to class a lease as an assured shorthold tenancy if the ground rent is above a certain amount and the requirement for the management company/freeholder to provide a certificate of compliance should all be abolished.
“A move towards commonhold would have its advantages in the sense that the individual would own their property outright without a ground rent. They therefore could not have their interest terminated for any reason. There would also be no need to secure lease extensions as the term dropped. However, this could potentially increase the original cost of the property.
“The owners of the commonhold would then be responsible for the management/maintenance of the common areas/building. Commonholders would have more of a day to day involvement in the works required and control over the costs. They can also appoint an agent to do this.
“It does not automatically follow that if a development is commonhold there will be then no disputes. The owners will still quibble costs, may not pay costs and then maintenance will not be carried out. The property value then may deteriorate. If the property cannot be forfeited for none payment of charges (as you can with leasehold) we need to consider how these owners will be forced to pay what they owe. At the moment this is not known.
Finally, we also need to consider lenders – at the moment not all mortgage providers will lend on commonhold properties. This may change as more detail about this is communicated.”
Stephensons are always happy to help whether you are selling or buying and our conveyancing new business team can offer initial guidance on matters and provide you with a quotation on costs. Call us on 0161 696 6187. Alternatively you can use our online quote calculator to get an idea of your legal fees and one of our conveyancing specialists will call to discuss this with you.
Comments