End to Complex Leasehold Costs Promised by the Government

leasehold costs

The British government has announced plans to overhaul England’s controversial and highly criticised leasehold system in order to eliminate the excessive costs homeowners often face when extending a lease.

In particular, owners of former council properties who purchased their homes in the 1980s are likely to benefit from the planned reforms, which, according to estimates, could save up to four million homeowners across the UK thousands of pounds.

But while the proposed protections for leaseholders have been welcomed by many, some experts have suggested that those who have already paid excessive fees and charges over the years should be provided with a refund and appropriate compensation.

Amendments to the system

Many properties across the United Kingdom continue to be sold on a leasehold basis, wherein a lease on the property is granted by the freeholder for a specific period of time. This period of time usually ranges from 99 years to 125 years but can be as long as 999 years.

This therefore means that when the property is purchased on a leasehold basis, the buyer does not in fact gain outright ownership of it. They simply purchase the entitlement to occupy the property for a set period of time. After which, they have the option of applying to their freeholder for a lease extension, which they are expected to pay for.

One of the factors used to calculate these extension fees is the ‘marriage value’ of the property, which refers to the property’s increase when the lease extension is granted. Following recommendations by the Law Commission, this marriage value fee system is set to be abolished to improve transparency and affordability for those applying for lease extensions.

“Across the country, people are struggling to realise the dream of owning their own home but find the reality of being a leaseholder far too bureaucratic, burdensome, and expensive,” commented Housing Secretary Robert Jenrick.

The announcement of the new legislation was welcomed in general by the Leasehold Knowledge Partnership, though some have already said that the new protections do not go far enough and further clarification should be provided on how the new legislation will benefit all leasehold property owners.

Zero ground rent

One important aspect of the policy overhaul will be that leaseholders will be able to apply for lease extensions of 990 years to ensure they do not run into major difficulties when selling their properties.

When a home is fast approaching the end of its lease, it can be extremely difficult to sell as the subsequent buyer would be forced to pay the appropriate costs to extend the lease.


Developers remain adamant that the leasehold system in its current form is fair and effective for most people, but the government has again stated that zero ground rent should apply to all new leasehold properties.

“While we welcome the government’s initiative to reduce ground rents to zero for all new retirement properties, we would argue this needs to be extended to all retirement properties to create a level playing field,” said Propertymark chief policy adviser Mark Hayward.