New government proposals could make it cheaper for leaseholders to own their own buildings

Leaseholders in England and Wales are expected to find it easier and cheaper to buy the freehold of their homes under new government proposals.

Under the current system, only some residential leaseholders in England and Wales can choose to buy their building outright through enfranchisement, or take over the management of their building, in what is known as a ‘right to manage’.

As part of a consultation which opened this week, homeowners and the housing industry are being invited to give their views on proposals from the Department for Levelling Up, Housing and Communities, to allow more leaseholders in mixed-use buildings to take control and ownership of their building. 

The consultation follows housing secretary Michael Gove’s warning on Monday (10th January) that developers must pay to fix the cladding crisis as the government overhauls its approach to building safety.

Thousands of future leaseholders are already set to benefit from the first of the government’s reforms to the leasehold system, expected to take effect later this year, that puts an end to ground rents for most new residential leases and lease extensions.

“The current leasehold system is outdated, unbalanced and broken — and we are determined to fix it,” said leasehold minister, Lord Stephen Greenhalgh.

“Our proposals aim to rebalance power and should see more leaseholders than ever before owning the full rights to their homes.

“This comes on top of our new approach building safety, which includes decisive action to protect leaseholders.”

The consultation will run until 22nd February 2022, and seeks views on proposals to give more leaseholders the ability to manage or own their properties; in buildings where there is a mixture of homes, and other non-residential facilities, such as shops and restaurants.

If shops and other similar properties take up over 25% of the total floorspace, then leaseholders cannot collectively bid to take control of their building.

New proposals could give these leaseholders the right to manage or buy their building outright, by increasing this limit to 50%, enabling them to have more control over how shared facilities are run and have the final say on building maintenance costs.

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