The government has announced that no new residential long leases will be granted over houses and ground rents on new long leases of flats will be nil.

The government was prompted into action following a consultation in the summer of 2017, bringing to light the problems concerning leasehold housing and rising ground rents.

There have also been proposals to make it easier for people to buy the freeholds of their property and to offer a right of first refusal to leasehold house owners.

We await the government’s further proposals concerning how it intends to help leaseholders with burdensome and rising ground rents and will look at introducing a right of first refusal for leasehold house owners. We look forward to receiving further guidance later this year when draft legislation is brought before Parliament.

Whilst in theory this looks to be a good thing there are problems.  In some cases developers may not own the freehold over a development site but may themselves only have a leasehold interest so would have no choice but to grant a long lease to a house buyer. 

The virtual abolition of new ground rents leaves no incentive for professional freeholders to retain the freehold over buildings.  This means they are far more likely to give the freehold to residents.  This can be a good thing but it would mean a reliance on lay people as opposed to professionals to ensure the building is properly insured and maintained.