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AFG LAW warn that homeowners need to be aware that leasehold reforms may be scaled back

Tuesday April 2, 2024

Leading North West Law Firm, AFG LAW, has warned homeowners that they need to act now after this week’s news that plans for leasehold reform may be scaled back.


Michael Gove’s plans to reduce all existing ground rents on millions of leasehold homes in England and Wales have faced opposition from the Treasury after lobbying by pension and investment managers. Pension funds have investments in freehold ownership and the concern raised is that these investments will become worthless if annual ground payments (some as high as £400 per year) are scrapped.


Dominique Oliviero, Conveyancing Solicitor at AFG LAW explains more:

“Currently, if a leasehold homeowner pays a ground rent in excess of £250 per year and falls into arrears, section 8 of the Housing Act 1988 gives the freeholder the power to take possession of the property and bring the lease to an end.


“Mortgage lenders are becoming increasingly reluctant to lend on leasehold properties where the ground rent exceeds £250 per year. This is due to the risk that the freeholder could take possession of the property, without their consent or knowledge, if the homeowner doesn’t pay. “


Recent months have seen a significant rise in Leasehold homeowners becoming aware of this issue. Many were hopeful that the plans to reduce all existing ground rents to a peppercorn (zero) would be the resolution. However, with this latest news this may no longer be the case – and homeowners need to be aware of this.


Dominique continues:

“So what options are available to you if you are affected by the £250 ground rent issue? There are two– either buy the freehold of your property from the freeholder or agree a Deed of Variation to the lease for your property.


This Deed of Variation could either reduce the ground rent below the £250 threshold or include a clause to state that the freeholder will serve sufficient notice on any mortgage lender who has an interest in the property prior to taking steps to enforce section 8 of the Housing Act.

Both options will incur costs. It is likely that the more expensive option will be to buy the freehold.”


She advises that any homeowner who finds themselves in this situation should seek legal advice from a solicitor who will be happy to contact your freeholder on your behalf to enquire whether they would be agreeable to either of the 2 solutions above and if so, what the cost will be.


AFG LAW, with offices in Bolton and Bury is a long established, multi-disciplinary law firm providing a range of services across the region and beyond. With experts in aspects of law including Family, conveyancing, commercial property, dispute resolution, wills and probate, it is built on traditional foundations combined with modern values and a fresh, forward thinking approach.




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We offer a full range of legal services for individuals and businesses alike.

Many of our services are provided UK-wide, with our physical offices located in Bolton and Bury.