The Law Commission has unveiled its long-awaited consultation on leasehold reform, admitting that achieving consensus between landlords and leaseholders will be impossible.
The Government last year asked the Law Commission to review the enfranchisement process for houses and flats to make it simpler, easier, quicker and more cost-effective.
Its consultation proposes removing the requirement that leaseholders wait two years before looking to purchase their lease and extends the criteria, allowing those on housing estates to purchase theirs either collectively or individually.
The Law Commission has proposed more rights for leaseholders, such as standardised form for claims and new rules that a notice will have been deemed to have been served on a landlord if posted to a previously specified address.
This means leaseholders will not have to take time-consuming and costly steps to locate their landlord where they have not been provided with up-to-date contact details and will not be faced with assertions that landlords have not been properly served.
The document also outlines ways to reduce the costs of leasehold extensions and freehold purchases, including introducing a fixed costs regime for non-litigation fees, and providing a simplified formula for valuations of the premium charged on the transaction, with an online calculator to support valuations.
The Law Commission warns that any formula couldn’t be one size fits all as the professional costs may outweigh the premium, suggesting there could be a different regime for lower value claims.
In a nod to rights of freeholders, the Law Commission says it will develop a human rights analysis of the valuation options, warning changes could impinge on the right to peaceful enjoyment of property.
The document said: “The interests of landlords and leaseholders are diametrically opposed, and establishing consensus between the two interest groups in relation to valuation but also in relation to many of the other issues we are considering will be impossible.”
Professor Nick Hopkins, Law Commissioner, said: “The current system is complex, slow and expensive and it’s failing home owners. Many feel that they are having to pay twice to own their home.
“Our proposals would make it easier and cheaper to buy the freehold or extend the lease of their home, ensuring the system works for ordinary home owners across the country.
“We want to hear views from across the spectrum on how this complicated area of law can be improved.”
Housing minister Heather Wheeler said: “The Government is committed to banning leaseholds for almost all new build houses and restricting ground rents to a peppercorn.
“It’s also unacceptable for leaseholders who want to buy their freehold or extend their lease to be faced with overly complicated processes and disproportionate costs.
“I welcome the Law Commission’s proposals that have the real potential to help those leaseholders who are having to deal with these outdated practices.”
Commenting on the consultation, Mark Hayward, chief executive of NAEA Propertymark, said: “Thousands of home owners are stuck in leases across the country facing escalating ground rent, charges for making basic alterations and growing more concerned that their homes are unsellable.
“Helping those who feel trapped by their situation is a real challenge and we hope this process will result in a robust solution for all those affected and who are unable to sell their homes.”
The consultation closes on November 20.
Its quite simple if you ask me. From here forward…Lease on house are banned unless there is a very very specific reason for doing so, and in that case the houses on the development each get a share of the freehold. Leases on new flats should be 999 years, thus removing the problem on expensive lease extensions and problems selling the flats when the lease runs below 70 years.
Lastly the selling on in bulk of freeholds to a third party needs restricting. The likes of Persimmon, Wimpy etc, flogging on freeholds the minute a development is complete is in my opinion underhand. Leases form a legal necessity and should not be a way of making money at the expense of the homeowner.
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