Shared ownership leaseholders will be given the right to extend
their leases by 990 years at zero ground rent as part of the
leasehold reforms that the Government has announced under the
Leasehold Reform (Ground Rent) Bill. The new model shared ownership
lease requires any new leases be granted with a minimum 990 year
term.
As a result, many property developers will now require the grant
of a 999 year lease, as opposed to the 125/250 year leases
typically seen in the market until now.
In this context, it is useful to note the risk of
"enlargement" provisions. In short, this is where a
leaseholder can exercise a right to a freehold interest in the same
land.
Enlargement can occur where a lease has a term of at least 300
years. Given the longer leases now required by developers in order
to satisfy the shared ownership requirements, enlargement is an
issue landowner need to be aware of and work around in order to
preserve the value of a freehold reversion.
