A fairer deal for leaseholders of houses and flats
The Law Commission has proposed a series of radical reforms designed to provide a better deal for leaseholders who want to purchase the freehold or to extend the lease of their home.
The proposals would:
- Make the process (known as “enfranchisement”) easier, cheaper and quicker
- 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
In addition, at Government’s request, the Commission has provided options to reduce the price payable by leaseholders to buy the freehold or extend their lease while ensuring sufficient compensation is paid to landlords to reflect their legitimate property interests.
The proposals, which are now open for consultation until 20 November 2018, would save leaseholders time, stress and money, reducing legal costs and helping to prevent unnecessary disputes.
Law Commissioner Professor Nick Hopkins said:
“The current system is complex, slow and expensive and it’s failing homeowners. 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 homeowners across the country.
“We want to hear views from across the spectrum on how this complicated area of law can be improved.”
The system has been widely criticised as being too costly and difficult for leasehold homeowners. It is also seen as overly complicated, being the product of over 50 Acts of Parliament, totalling hundreds of pages. For example, there are different rules for leaseholders of houses and flats.
In response, the Law Commission was asked by the Ministry of Housing, Communities and Local Government (MHCLG), and by the Welsh Government, to propose reforms that would promote transparency and fairness in the residential leasehold sector and provide a better deal for leaseholders as consumers.
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.”
Welsh Government Housing and Regeneration Minister Rebecca Evans said:
“There has been widespread criticism of poor practice in the use of leasehold in Wales, and I have been clear that the Welsh Government will not support poor practice that has a negative impact on homeowners. This work is part of efforts to improve transparency and understanding for people who have leasehold agreements as well as those entering into leasehold transactions in Wales.”
Further information
For enquiries about the project, please contact
propertyandtrust@lawcommission.gov.uk
The consultation paper
The full report, “Leasehold home ownership: buying your freehold or extending your lease”, together with a summary of the paper, can be read on the Law Commission website after 00:01 on Thursday 20 September.
The closing date to respond to the consultation is 20 November 2018.
Details on how to respond to the Law Commission’s recommendations and suggestions can be found here.
About the Law Commission
The Law Commission is a non-political independent body, set up by Parliament in 1965 to keep all the law of England and Wales under review, and to recommend reform where it is needed. Since then more than two-thirds of all reports have been accepted or implemented in whole or in part.
In December 2017 the Law Commission announced that it was to start a project on residential leasehold and commonhold reform as part of its 13th Programme of Law Reform.