A recent response by the Chartered Institute of Legal Executives (CILEx) to the Law Commissions consultation ‘Leasehold home ownership: Buying your freehold or extending your lease,’ has claimed that leaseholders continue to be placed at a disadvantage in comparison to landlords.
76% of CILEx members believed that the law in its current iteration offers increased protections to landlords at the detriment to leaseholders.
However, the report claims that new regulations should offer a balanced approach to avoid dissuading investors from becoming landlords in the future as a reduced property pool could create devastating results for leaseholders in the future.
The 50-page paper was clear that new laws should not adopt a one-size fits all to avoid creating contradictory rules that would fail to consider a myriad of land arrangements all with differing rights attached.
The CILEx response to the Law Commissions consultation, stated: “Our members showed caution against grouping landlords together into one overarching category, overlooking the existence of individual landlords and small to medium sized enterprises who do not pose the same risks (e.g. inequality of arms) as their larger counterparts.”
“CILEx stresses that along with recognising these nuances within the leasehold sector, and the disparate nature of different landlords; it is imperative that reforms do not unjustifiably shift the balance of favour onto leaseholders without due regard towards landlord interests.”
CILEx were clear that highlighting the importance of improving consumer awareness of costs and processes within the enfranchisement regime was a priority.
Additionally, providing clearer information to front line practitioners on how the multitude of ongoing leasehold reforms shall interact and be prioritised was also viewed as important.
CILEx also raised the following key points in the report:
- Enfranchisement reforms must take into consideration concurrent reforms within the leasehold and wider housing sector to ensure reforms are dovetailed together. Leaseholders of houses should have the right to longer lease extensions as the current 50-year period is no longer fit for purpose;
- Landlord rights to repossession for the purposes of redevelopment should be limited to the end portion of a lease, and supplemented with a mandatory notice period that provides sufficient time for leaseholders to reorganise their affairs;
- All freehold acquisition claims should enable enfranchising leaseholder/s to discharge any mortgage secured against the freehold directly;
- The qualifying criteria based on financial limits, as well as the two-year limitation on exercising enfranchisement rights, should be abolished;
- There should be standardised simpler forms provided for commencing an enfranchisement claim;
- The concurrent jurisdiction of both the tribunal and county courts to deal with enfranchisement-related disputes should be reformed as it has led to added costs, time delays and exploitation of legal process; and
- A single valuation expert would be useful in solving valuation disputes outside of the tribunal.
Philip Sherwood, the President of CILEx said: “We acknowledge the efforts of different agencies, including the Law Commission, to address the concern that leaseholders are at a disadvantage in the current system, but reform must not be piecemeal or fragmented.
“The Law Commission consultation represents a good start to levelling the playing field and ensuring that leaseholders can assert their rights against unfair landlords.”
What should be done to ensure that current leaseholders are not exploited? Are there enough protections for landlords in the current system?
One Response
I believe that the major cause of inequality between freeholder and leaseholder is not the latter’s lack of rights but the difficulty of working out what rights they have and what they mean.
Leases are terrible documents drafted for the benefit of those with knowledge of the subject – not consumers.
My own lease is typical.
No index, table of contents, section headings (except in one schedule) or clause headings. A reader can only start at the beginning and plough through in the hope that what ever information is needed will emeege. I mentioned to my landlord that a date in a rent demand was wrong. He had to ring me up because he couldn’t find it in the lease despite his signature being on it. And he having paid a solicitor to produce it.
And it misleads – saying that rents have to be paid within 14 days of demand despite statute having required 30 several years before it was drafted
We have a burgeoning legtech and proptech innovation sector in this country. Globally, document review by machine is making great advances using artificial intelligence.
If Cilex wants to make a difference it should promote substantial, regular prizes for apps contributing to the transmogrification of leases to covert them from barriers to knowledge to accessible sources of accurate information