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Leaseholders may have to wait years for law to come in, lawyer says
Although new rules on renewing leases have become law, leaseholders may be waiting for years for the changes to come into effect, a property lawyer has warned.
The Leasehold and Freehold Reform Act was one of the last laws to pass before Parliament was dissolved in May ahead of next month’s general election.
The law included measures to make renewing a lease cheaper and easier, such as the abolition of marriage value – the value of a property once a lease has been extended – which determines the cost of a lease extension for properties where the lease has fallen below 80 years.
The Leasehold and Freehold Reform Act also now allows leaseholders to extend their leases to 990 years instead of 90, and a removal of the requirement that someone needs to have owned a property for two years before being able to extend the lease.
Leasehold and Freehold Reform measures could come in 2026
Peer Baroness Scott wrote to Labour chief whip and fellow peer Lord Kennedy in April this year to suggest some parts of the law would not come into effect until 2026.
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Amber Krishnan-Bird, a specialist property solicitor from Osbornes Law, said: “A lot of homeowners who have heard the news about the new law have enquired about extending their lease, only to be disappointed that the law isn’t operational yet, meaning they would be extending under the old rules.
“Clearly the new law appears to be more beneficial to the leaseholder, so if there is no pressing need to extend then it could be worth waiting.”
Krishnan-Bird said some homeowners could still go ahead with extending their lease even if the new law has not come into effect yet.
She said: “If you need to sell your property or get a mortgage, then you may be left with no choice but to renew your lease before the new measures come in. There is also the issue that it isn’t clear exactly how much it will cost to renew a lease under the new regime and it could cost more as a way of compensating freeholders for the loss of married value.
“Finally, we don’t know who will be in government and if they would seek to make changes to the new law. As a result, it may be better the devil you know for some people, but we suggest that unless you need to extend then perhaps wait.”