There will be many – including the government – hailing the result as a victory and, to some extent, they would be right.  

Going forward, escalating ground rents will be scrapped and replaced with a small fixed peppercorn rent for new leaseholders in England and Wales. That is, of course, a good thing.  

But what about the estimated 4.5 million existing leaseholders who already have an agreement in place with their freeholder? Nothing has changed for these people. 

I’m not suggesting for one moment that those leasehold contracts also be reduced to a peppercorn rent – far from it. As one MP put it recently, that would be tantamount to “property theft”. 

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However, it feels as though an excess of zeal from MPs has scuppered a golden opportunity to improve the lives of those who have already entered into a leasehold contract with their freeholder. 

Compromise for existing leaseholders 

The problem with the proposed ground rent amendment for existing leaseholders was that it was clearly too binary: ‘0’ being all existing ground rents become fixed peppercorn rents and ‘1’ leaving rents as they are. 

Where was the middle ground that the Law Commission suggested? Which was, quite sensibly, the creation of a formula to cap excessive ground rents. Or, in other words, to cap the sort of escalating rents that should never have been allowed in the first place. 

By overreaching, no matter how well intended, MPs have dropped a ball and missed a real chance to put things right for all leaseholders, not just those who become one in the future. 

A second bill has been promised to help existing leaseholders. But when might we see that?  

Even if a second bill does emerge – and this is by no means certain – it will not glide through parliament as easily as the first one did, because it will deal with the more controversial aspect of leasehold reform: how to deal with existing agreements. 

Where does this leave existing freeholders, especially mid-term leaseholders with 80 years or less to run? 

In short, pretty much where they were before, but now minus the hope they had that help would be on the way. 

The situation is even more troublesome for mid-term leaseholders – those with 80 years or less to run on their leases – as their properties will continue to decay in value on a daily basis until they extend their lease.  

Leaseholders left behind 

Unfortunately, many people in this situation are asset-rich but cash poor, meaning they cannot afford the enfranchisement fees, which can run into tens of thousands of pounds. Without action, these people are left with a decaying and unsaleable asset. 

To demonstrate the seriousness of the situation some leaseholders find themselves in, consider for a moment that a 50-year lease surrenders about 0.75 per cent of its value every year.  

Like I said above, MPs could yet come to the rescue of the estimated 450,000 sub 80-year leaseholders in this situation in a future bill. However, I think leaseholders would be better off not pinning all of their hopes on such an eventuality. 

My suggestion to those people is: if possible, don’t delay. If you are in a position to extend your lease, do it now and don’t hold out for the government to act.  

After all, the promised reform may well be watered down, or may never happen.