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The extension of residential long leases is one of several aspects of leasehold in desperate need of reform. In land law terms, leasehold represents feudalism’s last stand. Indeed, with some minor exceptions, England and Wales are the only countries in the world adhering to this mediaeval style of property ownership.
Two decades ago, introducing commonhold was a valiant attempt at finding a workable alternative. But with only 150 units ever registered, commonhold not so much crashed and burned as failed to clear the launchpad. And until last year, competing interests and a lack of political will have repeatedly thwarted any further proposed reform.
On 30 June 2022, the Leasehold Reform (Ground Rent) Act 2022 (“the 2022 Act”) abolished ground rent on most new leasehold properties. But with ground rent only one of the many disadvantages of leasehold, the 2022 Act amounts to little more than tinkering around the edges. And even in terms of ground rent, it fails to benefit the estimated 4.6 million existing residential leaseholders.
Lease extension law change
The government has encouraged us to view the 2022 Act as merely phase one of a broader reform package. For example, among future changes promised is the right to extend your lease to a term of 990 years through a simplified and more transparent process. Currently, a statutory lease extension is limited to 90 years. But it begs the question of why such a seemingly straightforward change failed to find its way into the 2022 Act.
When will leasehold reform happen?
Earlier this year, Housing Secretary Michael Gove proposed the abolition of leasehold altogether. He said, “I don’t believe leasehold is fair in any way. It is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it.”
Mr Gove went further, suggesting we can expect the introduction of a leasehold reform bill in the next parliamentary session. But the devil is very much in the detail. The King’s speech – likely the last before the next general election – is delayed until the autumn. It also remains unclear how Mr Gove’s much broader proposal squares with the government’s official position on a second phase of reforms.
Don’t get me wrong, I firmly believe the tide is turning against leasehold, and significant reform, or even wholesale replacement, is inevitable. However, we must be realistic about the timescale; frankly, the odds are stacked against further reform in this parliament.