New rules on renewing leases may have become law but homeowners could still have to wait years until the laws come into effect, a leading property lawyer has warned.
The Leasehold Reform Act became law before parliament was dissolved in May ahead of the general election on 4 July.
But despite the law being rushed through parliament homeowners wishing to renew their leases to take advantage of the new rules face disappointment as the bill is unlikely to become operational until next year at the earliest. Indeed, some parts of the law may not be operational until 2028, according to a letter from Baroness Scott to Lord Kennedy in a written answer from April this year.
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.”
The Leasehold Reform Act will introduce a series of new measures that could make renewing a lease cheaper and better value. The main change saw an abolition of marriage value – the value of a property once a lease has been extended – which governs the cost of a lease extension for properties where leases have fallen below 80 years.
Other changes will see leaseholders able to extend their leases to 990 years instead of 90, a cap on ground rent increases and abolishing the rule that a person needs to have owned a property for two years before they are allowed to extend a lease.
Despite the changes in the law Amber says that some homeowners may still want to press ahead with extending their lease before the new law comes into effect.
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 vale.
“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.”
