BLOGS

A package of reforms are due to be introduced in England and Wales to transfer the future of the leasehold system.

An investigation into potential reforms began in 2017. In July 2020 the Law Commission published recommendations that would benefit the millions of leasehold homeowners in England and Wales over the course of three reports (The Enfranchisement Report, The Right to Manage Report and The Commonhold Report). The Government has now announced that it will begin to introduce recommendations made by the Law Commission.

The Enfranchisement Report proposed changes that would streamline the procedure with regard to lease extensions and purchasing freeholds in an attempt to create a fair system where the power is no longer shifted in favour of the freeholder.

The Right to Manage Report suggests changes that would make the right to manage process cheaper and more attainable for leaseholders and includes proposals such as making the process easier by reducing the number of notices that need to be served and improving the information and training available to right to manage companies.

The Commonhold Report proposed changes that would make commonhold not only a “workable alternative” to residential leasehold but the “preferred alternative”.

On 7 January 2021, the Government announced that legislation will be brought forward in the upcoming session of Parliament to make enfranchisement cheaper and simpler. Changes will be made to the law so that leaseholders of both flats and houses will be able to extend their lease to a new “standard” 990 years with a ground rent of zero.
A cap will also be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder in an attempt to stop freeholders quoting unreasonable and inflated prices and an online calculator will be introduced to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.
Measures will be introduced to protect the elderly in that ground rents for new leases on retirement properties will be restricted to zero. Additionally, the Government is abolishing prohibitive costs like ‘marriage value’ and introducing a provision so that leaseholders will be able to voluntarily agree to a restriction on future development of their property to avoid paying “development value”.
Further measures will be introduced in due course with regard to the commonhold system but the above reforms will pave the way for a workable commonhold system. A Commonhold Council will be set up to prepare homeowners and the housing market for the widespread take-up of commonhold, a model that is widely used around the word and allows homeowners to own their property on a freehold basis. Blocks are jointly owned and managed which means that when someone buys a flat or house, they truly own the property and are able to make decisions about its future.

These changes will be welcomed by many leaseholders as leasehold home ownership will become much fairer and more secure.

If you would require advice with regard to a lease extension or purchasing your freehold, please contact a member of our Property Dispute Resolution team on 01935 382680.