Leasehold Experts Warn Reforms Could Take Years

Residential Leasehold Law experts advises Leaseholders not to wait around for the recent Law Commission reforms as it could take many years to materialise.

Leasehold Law, who champion the rights of leaseholders and pursue their right to enfranchise, strongly aired their views on the proposed reforms believing wholesale restructure of leasehold issues is still years away.

With the leasehold sector being put under the spotlight over recent years, with both the media and politicians scrutinising every aspect,  resulted in huge pressure on the current leasehold system to be radically overhauled.

Due to the current system not working for millions of homeowners, at the end of last month, the Law Commission published its three long-awaited reports with the intension to shake up the sector and alter the way estate agents describe, manage and sell leasehold properties.

The awaited reports included many recommendations in three key areas:

• Buying the freehold or extending the lease on a property (enfranchisement)
• Exercising the Right to Manage and
• Reinvigorating commonhold as an alternative to leasehold ownership.

Belinda Walkinshaw, managing partner of Leasehold Law, says:

“Leasehold reform is a complex process, and we expect it may be several years before any of these recommendations become law. The fight is far from over and there is no guarantee that the outcome of this process will deliver the reforms needed to make the property market fair for leaseholders.

“We now call on the government to fulfil its promise to make extending a lease or purchasing a freehold ‘much easier, faster and cheaper’. It is essential that decision makers reform the law as quickly and effectively as possible, as any protracted delay will only work against leaseholders.”

Leasehold Law says the crucial recommendations which they think would reinforce leaseholders’ rights are:

  • abolishing the requirement for leaseholders to own their flat for two years before they can apply to purchase the freehold – this will enable leaseholders to enfranchise immediately and reduce the potential for the freehold to be sold on to other investors during the initial two-year period;
  • increasing the term from an additional 90 years to a new term of 990 years will save leaseholders the considerable cost of repeatedly extending short leases;
  • restricting non-statutory lease extensions to only include the same (or very similar) terms as the existing lease will deny a landlord the opportunity to introduce new onerous provisions into the lease terms;
  • buying out the ground rent under the existing lease will provide a cheaper alternative to paying the premium for a lease extension and free leaseholders from the ongoing responsibility to pay ground rent, especially where they already have relatively long leases and so don’t require an extension of the term but have onerous ground rent provisions.

Walkinshaw warns that those leaseholders who have a lease which is close to 80-year mark should not wait around for the Law Commission report to be become law as there are no guarantees and should instead act now to extend their lease, as the cost to extend their lease will exponentially increase once it dips below 80 years.

With the current leasehold system leaving many homeowners feeling like they don’t truly own their own home, the Leasehold Group of Companies and The Association of Leasehold Enfranchisement Practitioners (ALEP), both reviewed and welcomed the publication of the proposals and the potential benefits it could bring.

However, there was some opposition, as not all leaseholders are embracing the changes that could potentially be made law.

Despite a lot of positivity surrounding the Law Commission proposed reformation of the leasehold sector, research conducted by Savanta Group, revealed that some leaseholders themselves aren’t 100% happy with the recommendations.

Whatever the outcome in the coming years, it is ultimately the decision of the Government and it is in their hands to reshape the sector and put in place viable ways to benefit all those who are impacted by the current flawed system.

1 Comment

  • test

    The Savanta research was paid for by ground rent landlords. Their report makes clear their research took place 5 months before the Law Commission published their recommendations. Savanta have refused to publish the questions asked or give a breakdown of the people surveyed so this is hardly credible research.

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