News & Views

Leasehold reform

The Law Commission has launched a consultation into the leasehold enfranchisement of houses and flats. Amongst the proposals are a unified procedure for both flats and houses which currently operate under separate regimes for claiming the freehold.  The proposed reforms would also remove the requirement for leaseholders to own a property for a minimum of two years before making a claim for the freehold.

Difficulties continue to be experienced with lenders, where housebuilders have sold leasehold homes with annual “ground rent” charges that double every ten years.  Banks do not like to lend on such properties, particularly where such rents are determined with RPI and are not ascertainable nor set out in the lease.

Reform to the procedures for dealing with missing landlords would also be welcome.

The most contentious aspect of the consultation is a reform of the valuation procedure.  The proposed reforms may reduce the amounts payable by leaseholders at the expense of landlords.  This would of course adversely impact on the value of landlords’ ground rent portfolios.

Reform of this area is also required so that leaseholders cannot be at risk of losing their largest and most valuable asset following a first-tier tribunal ruling, in November 2017, which granted forfeiture of the lease and possession of a property to a landlord where a long leaseholder repeatedly failed to remedy unauthorised alterations in breach of the lease.

Views on the proposals are invited up to 20 November 2018.

For further information please contact Caroline Vernon or our residential property team.

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