The following press release was issued today by the London Mayor’s office.
LKP is delighted publicly to praise this initiative.
The Mayor of London, Sadiq Khan has outlined plans to increase the rights of leaseholders in the capital by setting out a new expectation that all shared ownership homes built as part of his new Affordable Homes Programme (AHP) are sold with a 999-year lease as standard.
Sadiq is determined that London leads by example and sets the benchmark for higher standards for leaseholders across the UK.
The Mayor is committed to tackling London’s housing crisis and improving the standards of homes available to Londoners. As part of this, leaseholders, including those living in shared ownership properties, should be protected as far as possible from unreasonably costly and burdensome leasehold extension processes.
Earlier this month, ministers announced plans to streamline leaseholders’ ability to extend their leases to 990 years with zero ground rent. While the Mayor supports these measures, he believes that the objective of protecting leaseholders can also be achieved through the adoption of longer leases from the outset. The Mayor will continue to urge Government to act quickly in introduce wider leasehold reform.
Shorter leases have an impact on the value of the property. Properties tend to depreciate drastically when there are 80 or fewer years left on the lease. With shorter leases, the point at which this happens is reached sooner, forcing leaseholders to start a lease extension process to secure the value of the property.
The new expectation, set out in a letter to City Hall housing partners by Deputy Mayor for Housing Tom Copley, will apply to all shared ownership homes delivered through Sadiq’s new £4bn Affordable Homes Programme which will run from 2021-26. The Mayor has hit every single one of the delivery targets in the current Homes for Londoners: Affordable Homes Programme 2016-2023.
In the letter, the Deputy Mayor also strongly encourages developers to ensure that other homes they build, such as shared ownership homes not in receipt of AHP funding, or private leasehold homes, are offered on a similar long-lease basis where it is possible to do so.
The Mayor of London, Sadiq Khan, said: “Shared ownership properties can be a helpful first rung on the housing ladder for Londoners. However, too many leaseholders continue to face unfair extra costs that increase stress for themselves and their families.
“Shared owners deserve to feel secure in their home for as long as they live there without the threat of an unreasonably costly and burdensome leasehold extension process hanging over them.
“I’m proud of my record on new genuinely affordable homes, including the action we’ve taken to start building more new council homes last year than in any year since 1983. It’s long past time the Government enacted leasehold reform, and I’m determined to lead by example by doing everything I can within my powers to help leaseholders and improve shared ownership.”
Sebastian O’Kelly, Director, Leasehold Knowledge Partnership: “We applaud the London mayor for urging that all shared-ownership leases should be for 999 years.
“The point of shared ownership is to give the least well-off a chance to get on the housing ladder. It is mortifying to come across cases where
shared owners have taken years to staircase up to 100% ownership and then get kicked in the teeth because the lease needs extending, at the cost of another £20-30,000.
“Wherever possible, all shared ownership leases should be 999 years or no shorter than the headlease owned by the social landlord issuing these subleases.”
Notes to editors
Since taking office, the Mayor has overseen the starts of 22,084 shared ownership homes and is on track to hit his targets in the Affordable Homes Programme.
Lease terms are negotiated between freeholders and leaseholders, with freeholders typically setting the length of leases. By convention, leases tend to be offered for 99 or 125 years, although shorter leases could also be offered. The power to reform leasehold sits with the Government, not the Mayor. However, the Mayor is using the influence he has through his Affordable Homes Programme to lead by example.
Lease extensions are usually costly ventures, and the current statutory length for extensions is only 50 years for houses and 90 years for flats. Following a review on lease extensions, the Law Commission recommended Government adopt a statutory 990-year extension for both houses and flats. Earlier this year, Government announced it would bring legislation forward adopting the proposed new standard of 990 years.
The Mayor recently showed his support for leaseholders trapped by the cladding scandal by proposing that the Government introduce a ground-breaking levy on major private property developers that could raise £3 billion to address building safety standards. More information here: https://www.london.gov.uk/press-releases/mayoral/mayor-calls-for-levy-on-private-developers-to-fund
More information about the Mayor’s Affordable Homes Programme 2021-26 can be found here: https://www.london.gov.uk/press-releases/mayoral/mayor-to-start-new-generation-of-social-housing