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Leaseholder Consultation Opens

Reasons to choose Wilson Browne

The Law Commission has launched a consultation on proposals which could significantly improve conditions for leaseholders.

If leaseholders want to purchase the freehold or extend the lease of their home the proposals would save leaseholders time, stress and money, and reduce legal costs as well as preventing unnecessary disputes if passed.

The consultation launched by the Law Commission can be accessed here and closes on 20 November 2018.

The commission’s proposals aim to:

  • make the enfranchisement process simpler, cheaper and more efficient
  • improve and enhance the rights of leaseholders to buy their freehold or extend their lease
  • introduce a simpler unified procedure for houses and flats
  • remove limitations on the right to enfranchise, including the requirement that leaseholders must have owned their property for two years before making a claim.

The consultation proposes that existing rights to a new lease would be retained but the length of the lease extension would be increased to 125 or 250 years (presently 50 years for houses and 90 years for flats).

The existing rights to acquire the freehold would also be retained but would be extended so as enable multiple buildings on an estate to act collectively to acquire the freehold of the whole estate, rather than just of one building. Enfranchisement would generally have to be through a corporate body formed for that purpose. A new “right to participate” is also proposed whereby leaseholders who do not participate in the original freehold purchase can nonetheless join the enfranchisement company at a later stage on payment of a specified sum.

Changes to the process of valuation are also being considered and the consultation seeks views on whether to prescribe a formula (e.g. a multiple of ground rent; percentage of capital value) or prescribe a methodology by which certain factors must be taken into account or excluded.

At the government’s request, the Law Commission has also suggested options to reduce the price payable by leaseholders to buy the freehold or extend their lease while safeguarding sufficient landlords’ compensation to reflect their legitimate property interests.

The Law Commission say that they “want to hear from everyone with views on the law and process of enfranchisement – leaseholders of houses and flats, landlords, campaigners, property developers, industry bodies, professionals and academics”.

The Consultation includes a short survey for current and former leaseholders to complete so that the Law Commission can collect information on the range of different leases held by leaseholders in England and Wales, and on leaseholders’ experiences of the current enfranchisement process. This information will provide part of the evidence base that will be used to produce the Law Commission’s final recommendations for reforming the law.

If you need any property advice contact our Specialist team.