Reforms to make it easier for leaseholders to buy their homes

Radical reforms to provide a better deal for leaseholders who want to purchase the freehold or to extend the lease of their home have been put forward by the Law Commission.

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.

The Commission has also provided options to reduce the price payable by leaseholders to buy the freehold or extend their lease while ensuring enough compensation is paid to landlords to reflect their legitimate property interests.

The current system has been widely criticised as being too costly and difficult for leasehold homeowners. It is also seen by many 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 Government to propose reforms that would promote transparency and fairness in the residential leasehold sector and provide a better deal for leaseholders as consumers.

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.”

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.”

We shall keep clients informed of developments.

Please contact Shyam Patel if you would like more information about the issues raised in this article or any aspect of commercial property law.