Question to the Department for Levelling Up, Housing & Communities:

To ask the Secretary of State for Levelling Up, Housing and Communities, what plans he has to regulate the cost of residential lease extensions; and if he will make a statement.

We are taking forward a comprehensive programme of reform to end unfair practices in the leasehold market.

Under the current system, too many leaseholders find the process for extending their lease or buying their freehold prohibitively expensive, too complex and lacking transparency. The Government is addressing historic imbalance to ensure fairness for leaseholders, whilst taking account of the legitimate rights of freeholders. We will continue to ensure we meet this objective as we bring forward reforms.

In January 2021, the Government announced a package of reforms on enfranchisement valuation. The Government will reform the process of valuation that leaseholders must follow to calculate the cost of extending their lease or buying their freehold. We will abolish marriage value, cap the treatment of ground rents at 0.1% of the freehold value, and prescribe rates for the calculations at market value. The Government will also introduce an online calculator, further simplifying the process and ensuring standardisation and fairness for all. These changes will result in substantial savings for some leaseholders, particularly those with fewer than 80 years left on their lease. Our reforms also make sure that sufficient compensation is paid to landlords to reflect their legitimate property interests.

Through these reforms, the length of a statutory lease extension will increase to 990 years, from 90 years (for flats) and 50 years (for houses). Leaseholders will be able to extend their lease with zero ground rent on payment of a premium.

We have already taken action to end unfair practices in the leasehold market, beginning with the Ground Rent Act, which comes into force on 30 June 2022, and is the first part of a two-part programme of legislation to reform the leasehold system in this Parliament.