A new leasehold reform could save millions of homeowners looking to extend their lease or buy their freehold £1,000s.
Related: Can you guess what's on the top of Rightmove's buyers wishlist? It may surprise you...
The proposal published by the Law Commission, an independent legal body, on Thursday outlined changes to lease extension and freehold purchase. These will not only simplify the process but also cut the overall cost.
Leasehold reform proposal
If you own a leasehold property you are probably all too aware of the potential money-pit falls of extending a lease or purchasing your property's freehold. In recent years more and more homes have been sold as leaseholds.
If your lease is creeping towards 80 years you will probably be dreading it. Under this length not only does the property become harder to sell, but you are liable to pay 'marriage value' on top of the costs of the lease extension.
Unfortunately, extending a lease is not straight forward. It can take a long time and you can end up shelling out £1000s on legal advice and paying the freeholder.
Increasingly homeowners are opting to buy a property's freehold to avoid increasing ground rent, or if the current freeholder isn't maintaining a building well. However, this can end up costing homeowners over £10,000. Taking months to go through.
The new scheme proposes removing the marriage value and another premium called 'hope value' from the cost of purchasing a freehold.
The Law Commission has estimated that this could cut the cost of purchasing a freehold by £6,000. It will also wipe out the added expense of increasing a lease.
If you own a leasehold property this will be music to your ears. However, before you get too excited, the changes are still a long way off.
The reforms are still in the proposal stage and it is now up to the Government to consider them.
Related: How long should you stay in a home before moving? And how long have you lived in your property?
Our fingers and toes are crossed that these reforms become a reality before our leasehold hits the 80-year mark.
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