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Key points in the Law Commission’s leasehold consultation

Posted: 30/11/2018

Partner Martin Codd, who leads the firm’s property entrepreneurs team, has been busy this month helping the Law Society by reviewing the 546 page consultation paper on leasehold reform issued by the Law Commission – the independent body which reviews the law in England and Wales. The paper is entitled Leasehold home ownership: buying your freehold or extending your lease. The review process will help the Law Society respond to the Commission’s suggested reforms.

This consultation seeks to radically overhaul the entire basis of buying your freehold and/or extending your lease. At present the system is perceived to be slow and costly and weighted in favour of the landlord.

Some of the more radical proposals being suggested are as follows:

  • to abolish the two year qualifying period of ownership for lease extensions;
  • to bring leaseholders of a house in line with apartment leaseholders so they have the same right to the same length of lease extension;
  • to increase the length of new lease by 125 years or even longer!;
  • to either reduce or remove completely a leaseholder's exposure to landlords' costs;
  • to simplify all the procedures which are currently used and to speed up applications to the tribunal;
  • to bring into effect a much improved procedure when dealing with missing landlords;
  • to have an automatic transfer for any claim when the property has been sold as between the outgoing leaseholder and the new leaseholder;
  • to have one simplified process to be applied to all claims, whether you own a house, an apartment or if you want to acquire the freehold of your building or a large estate;
  • to simplify the valuation process;
  • shared ownership leases are to be extended without staircasing.

It is important to stress that none of the above measures are in force. The paper is merely a consultation asking for affected stakeholders to comment on the Law Commission’s proposals.

This is going to be a radical overhaul of the entire system and, as you can imagine, the large London estates are very concerned that if these proposals come into effect then the value of their estates will be reduced quite considerably.

The consultation closes on 7 January 2019. It is a tremendous opportunity to improve this complicated area of law and to improve the basis upon which freehold and lease extensions are required.

Finally, it’s worth pointing out that any new Act to bring in these changes is unlikely to come into effect until 2020 at the earliest.

If you have any queries in connection with the proposed reforms, please do not hesitate to contact Martin Codd.

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