A recent article published by Today’s Conveyancer has highlighted that recent developments in leasehold reform could trigger long delays to the implementation of the Leasehold and Freehold Reform Act 2024 (LAFRA).
In a landmark decision earlier this year, the High Court rejected a legal challenge brought by a consortium of major freeholders who argued that key provisions of the LAFRA infringed their legal rights. However, the Commons Housing Committee has now confirmed that there has been an application to appeal the High Court decision, which, according to some experts, could delay the implementation of these key reforms by more than three years.
Source: Today’s Conveyancer – ‘Freeholders appeal High Court decision on leasehold reform, triggering fears of long delays’.
Consequently, many potential homebuyers could be left uncertain about their legal position when buying a leasehold property.
At Bookers & Bolton, our property solicitors have been keeping a close eye on these developments and understand the concerns many buyers and current leasehold property owners have. Whether you’re a first-time buyer or looking to sell a property, it’s important to understand what leasehold property ownership involves.
In this article, our residential conveyancing team answers some frequently asked questions regarding leasehold property and reviews what the leasehold reforms could mean for you.
What is a Leasehold?
A leasehold property is the purchase of the property for a fixed term, but not the land that it is built on. You have an agreement with the freeholder which sets out the terms of your ownership, known as a lease. The leases are usually long-term and can range from 40 to 999 years.
What are the Advantages of Buying a Leasehold Property?
Regardless of the current uncertainty surrounding leasehold reform, there are still many benefits to consider, including:
- More Affordable – Leasehold properties, particularly flats, are usually less expensive and more affordable than freehold houses, making them a popular choice for first-time buyers or those on a tighter budget.
- Less Responsibility over Maintenance – In most cases, there is less responsibility for repairs and maintenance. Typically, the freeholder or management company is responsible for the building’s exterior, communal areas, and major structural repairs.
- Access to Shared Facilities – Some leasehold developments come with added benefits such as access to shared amenities like gyms, gardens, or parking spaces that are maintained by the management company.
- Right to Purchase the Freehold – There is still the possibility of buying the property outright, or a share of the freehold, through enfranchisement.
- Right to Manage – The Right to Manage is a legal provision allowing leaseholders of flats to take control of the management of the building where their flats are situated.
What are the Disadvantages of Buying a Leasehold Property?
As with any property purchase, there are various considerations buyers need to be aware of. When purchasing a leasehold home, consider the following drawbacks:
- Annual Payments and Ground Rents – One of the most significant differences between freehold and leasehold property ownership is that leaseholders typically have to pay annual ground rent to the freeholder. While the government has abolished ground rents for new leasehold properties, existing leaseholders may still face these charges. For more information on recent changes to the leasehold system, read our previous blog, ‘Abolition of Leasehold Flats’.
- Service Charges – These charges, which may include building maintenance fees, building insurance, and management fees, can be unpredictable and expensive.
- The Length of the Lease – As we highlighted in our previous blog on the difference between freehold and leasehold properties, when a lease drops below 80 years, a property can become harder to sell or remortgage, and extending the lease can be costly.
- Restrictions and Permissions – Typically, your lease will include restrictions, such as not owning pets or subletting. Additionally, you will likely need the freeholder’s permission before making any alterations to the home.
- Uncertainty over LAFRA Timeline – LAFRA aims to improve leaseholders’ legal rights, making it easier for them to buy the freehold of their property and to remove onerous clauses that allow for excessive service charges or unreasonable restrictions. However, expectations that this would be fully in force by 2026 are unlikely to be met, with experts warning that long-promised changes could be delayed for several years.
Buying a Leasehold Property in Alton or Hampshire
Before buying a leasehold property, it is essential to seek legal advice from an experienced, regulated professional. Our conveyancing specialists can review the lease terms, check for any potential issues, and advise you on whether the property meets current mortgage lender requirements.
If you already own a leasehold property and are considering a lease extension, exercising the right to manage, or buying the freehold, we can help with that too. While leasehold reforms have been delayed, there are still certain legal rights you are entitled to. Our lease extension solicitors can guide you through the process and assist with reviewing the proposed terms.
Leasehold Conveyancing Solicitors in Alton
As with any property transaction, ensuring that legal procedures are followed accurately and carefully is essential. At Bookers & Bolton, our Conveyancing Quality Scheme accredited solicitors are well-versed in leasehold property purchase, lease extensions and all related leasehold property matters.
We understand that for most people, buying or selling a property can be extremely daunting. Our highly skilled property lawyers are experienced and knowledgeable but also approachable, making the stresses of moving house easier to manage and giving you peace of mind.
Local Solicitors with Local Knowledge
Our law firm has a 100-year history and is proud to serve our local community of Alton, Hampshire, and beyond. We will guide you through the entire process of buying or selling a property, expertly taking care of the necessary stages to ensure your transaction progresses efficiently and as quickly as possible.
Get in Touch
For legal advice from experienced residential conveyancing solicitors, please contact us on 01420 558 335, email enquiries@bookersandbolton.co.uk or fill in an enquiry form today.
This blog post is for information purposes only and details may have changed since publication. It is not intended to be taken as advice or acted upon. If you are seeking legal advice, please contact our team of solicitors.
