Law Commission Consultation On The Reform of Leasehold Enfranchisement

The Law Commission has recently set out proposals to:

  - Make enfranchisement easier and quicker.

  - Reduce the costs incurred in purchasing the freehold or a lease extension.

  - Merge the separate rules for houses and flats.

What the rights should be?

It has been proposed that there should be a general right to all leaseholders that own either a flat or house to enter into a lease extension along with a right to purchase the freehold.

Who can exercise?

This is one of the key areas considered in the consultation, it has been proposed that a two stage criteria should be imposed. Firstly, to see if a lease extension is available and if so, see if the leaseholder can acquire the freehold at the same time. It has also been proposed that the 2 year mandatory requirement to have occupation will be abolished.

How can they exercise?

A much simpler process has been suggested whereby there would be a standard claim and a response form. Also, the benefit of the claim would automatically be assigned on any sale of the leasehold interest.

How much?

It has been suggested that a simpler valuation approach can be sought however it is quite clear that the Law Commission will be inundated with responses from Landlords. The suggested approach is to move away from a market value method and focus more on a ground rent multiplier with a percentage of the capital value of the Property being added.

What is next?

Consultation closes on 20th November 2018. Mike Brown will be attending the Association of Leasehold Enfranchisement Practitioners meeting to discuss the consultation whereby a formal response will be prepared and submitted to the Law Commission.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.