Problems in the leasehold system have needed fixing for a long time. The Law Society has proposed solutions in its response to a government consultation on reforming the leasehold system.
The Ministry of Housing, Communities and Local Government has sought views on how to improve four main areas of leasehold:
- the ban on the unjustified use of leasehold in new houses
- the reduction of future ground rents to a nominal value
- ensuring that the charges that freeholders must pay towards the maintaining communal areas are fairer and more transparent
- improving how leasehold properties are sold.
The Law Society believe that ground rents should have a simple structure and low rate which is transparent. If the government, as it has announced, chooses to adopt ground rent of a peppercorn, this would:
- be risk averse in relation to unanticipated outcomes
- be consistent with existing (and possibly future) enfranchisement legislation
- help to avoid some of the heavy consequences to which leaseholders can be exposed by failing to pay small amounts of ground rent.