Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 18
18
Accepted
Ensure leasehold extension legislation applies equally to all shared ownership properties and leaseholders.
Recommendation
Finally, the Government should ensure that any legislation passing through Parliament which has provisions to reduce the cost of, and simplify, the process of leasehold Shared Ownership 41 extension (for example, as in the Leasehold and Freehold Reform Bill) also applies to leaseholders in shared ownership properties, so that shared owners have the same statutory right to leasehold extensions as all other leaseholders. (Paragraph 94) Risk of a two-tier market
Government Response Summary
The government accepts the recommendation, confirming that shared owners will benefit from the Leasehold and Freehold Reform Bill's provisions, including a new statutory right to extend leases at a peppercorn ground rent, and other reforms to ensure they largely have the same rights as other leaseholders.
Government Response
Accepted
HM Government
Accepted
42. The Government agrees with the Committee that, wherever possible, shared owners should enjoy the same rights as other leaseholders. This is reflected in our approach to the Leasehold and Freehold Reform Bill, with shared owners benefiting from its proposals in the same way as any other leaseholder, except in some very limited circumstances. 43. The Bill will, for example, introduce a new statutory right for shared owners to extend their leases at a peppercorn ground rent on payment of a premium. When calculating the cost of a lease extension, shared owners will benefit from the new standard valuation methodology, with the determination of the ‘reversion value’ set in proportion to the size of share owned. This will make the process of extending a shared ownership lease more transparent and cost effective. 44. This is consistent with the Government’s overall approach to shared ownership within the wider context of its reforms to the leasehold system. The Leasehold Reform (Ground Rent) Act 2022 prohibits the charging of ground rent on the shared owner’s interest in new leases, granted post June 2022. As part of our recent consultation on restricting ground rents for existing leases, we also confirmed that any limits to ground rents would apply to a ground rent charged on the shared owner’s interest in existing leases. 45. In our official response to the consultation on ‘Reforming the leasehold and commonhold systems in England and Wales’, the Government also set out detailed proposals for how it believes shared ownership can be made to work effectively and equitably within a commonhold setting. 46. Finally, in addition to the reforms contained in the Leasehold and Freehold Reform Bill, the Renters (Reform) Bill contains a proposal to ensure that leases of seven years or more in length can no longer be considered assured tenancies. This proposal applies to shared ownership leases and will mean that shared owners enjoy the same statutory protections from forfeiture as other leaseholders.