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Government Reforms Make it Easier and Cheaper for Leaseholders to Buy Their Homes


The Housing Secretary, Robert Jenrick, has today announced that legislation to reform residential leasehold law will be introduced in the upcoming session of Parliament. This is welcome news for so many leaseholders this morning; despite the Press Release containing conflicting information – not sure whether the 990 years is the maximum term of the extension or the maximum that lease could be extended to! Either way it will mean that a lease will only need to be extended once.

The key points are that, once the legislation is passed, all lease extensions will be:

  • for a term of up to(?) 990 years;
  • at zero ground rent;
  • the premium payable will be capped;
  • marriage value will be abolished.

The zero ground rent provisions will not make too much difference for those extending their leases of flats, as the current right to a ‘peppercorn’ ground rent is effectively a zero ground rent. However, this will benefit those extending the leases of their houses.

I have assumed that the reference to a cap on ground rent payable in the Press Release should actually refer to a cap on the premium payable on a lease extension; and this is very good news for leaseholders. Especially if, as suggested, there is an accurate calculator which leaseholders can refer to. This should mean that it will be much easier to buy or sell a flat where the lease extension process has already been started – currently this can deter buyers because nobody can tell them with any certainty what the final premium payable will be.

The abolition of Marriage Value may be the best news, along with the capped premium. This is something which can make extending a short lease prohibitively expensive for many leaseholders, and these are often the leaseholders who need to extend their leases the most. I have spoken to leaseholders who are in terrible situations due to their short leases. They do not have the money available to extend their lease, so can only sell to a cash buyer at a reduced price which can mean that they are in negative equity and, depending on their circumstances, they cannot remortgage to borrow the money to extend their lease or take advantage of more favourable mortgage terms, so they end up trapped in a flat which is quickly depreciating in value and with a mortgage which is much more expensive than it needs to be. Marriage Value can also mean that it would cost more to extend the lease than would be reflected in the increase in its value with the lease extension, again, leaving leaseholders in a lose/lose situation.

The option for leaseholders to voluntarily agree to restrict future development on the property in order to reduce the Premium by removing the ‘development value’ is an interesting concept and I’m not sure that leaseholders would be well advised to restrict future owners as this could deter potential buyers.

The establishment of a Commonhold Council and the reintroduction of commonhold will be watched with interest and, as before, is only likely to be successful if the lenders are on board.

The Press Release suggests that there will be a piecemeal introduction of the provisions and the first piece of legislation to be brought forward is that which sets future ground rents to zero. If this is brought in as a standalone provision, without the 990 year lease term, cap on premiums payable and the abolition of marriage value then leaseholders looking to extend the leases of their flats will, unfortunately, have to wait a while before changes are introduced which benefit them.

As with everything, the devil is in the detail, and I will keep you updated – watch this space.

For more information please contact Ruth Burrell on 07312 825 787 or by email at

Please click here to view information on the GOV.UK website

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