The Arnold & Baldwin guide to leasehold reforms

The Law Commission has recently closed a consultation on its proposals for the reform of leasehold enfranchisement and is aiming to publish its final report and assist with the implementation of its recommendations later this year. So, what changes can we expect?

The consultation makes provisional proposals for reform that are designed to simplify and reduce the costs of acquiring a freehold or extended lease, provide a better deal for leaseholders by making enfranchisement easier, quicker and more cost effective, as well as reforming the existing rights of leaseholders.

Here’s a summary of some of the key proposals and what they could mean for you:

Leaseholders of flats

• One regime for both houses and flats, reducing complexity and costs.
• Prescribed forms for making and responding to any enfranchisement claim, making mistakes less likely to occur, preventing unnecessary costs and landlords taking advantage of leaseholders’ mistakes.
• The use of Tribunal to settle disputes and process claims in the case of missing landlords.
• Leaseholders no longer required to pay their landlord’s non-litigation costs or the introduction of controlled costs.
• No minimum period of lease ownership before the leaseholder of a flat can bring a claim, reducing delay and costs for leaseholders.
• A new right to participate in an earlier collective freehold acquisition, stopping leaseholders from being locked out of ownership.

Leaseholders of houses

• One regime for both houses and flats, reducing complexity and costs.
• No minimum period of lease ownership before a leaseholder of a house can bring a claim, reducing delay and costs for leaseholders.
• Leaseholders of houses able to extend their lease for a longer period, at a nominal rent and no limit on the number of extensions.
• A right for all leaseholders on an estate (whether they own a flat or house) to join together to acquire the freehold to the whole estate.
• Common procedure for dealing with missing landlords, ensuring leaseholders can exercise rights and save costs.
• The use of Tribunal to settle disputes.
• Leaseholders no longer required to pay their landlord’s non-litigation costs or the introduction of controlled costs.

Landlords

• One regime for both houses and flats, reducing complexity and costs.
• A 25% limit to apply to all freehold acquisition claims, allowing landlords to retain buildings with substantial commercial use.
• A power to require contributions to be made after the freehold is acquired, allowing estates to continue to be maintained.
• A single procedure to apply to any enfranchisement claim, reducing complexity, confusion and costs for all parties.
• Prescribed forms for making and responding to any enfranchisement claim, making mistakes less likely to occur.

It is anticipated that many of these proposals will be implemented so if you are thinking about extending the lease on your property, or you are a landlord who would like more information about the upcoming reforms, visit one of these pages for more information:

Lease extensions

Freehold enfranchisement

SOURCES

https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2018/07/Consultation-Paper-Summary.pdf

https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2018/09/Enfr-CP-Summary-for-leaseholders-of-houses-180920.pdf

https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2018/09/Enfr-CP-Summary-for-leaseholders-of-flats-180920.pdf

https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2018/09/Enfr-CP-Summary-for-landlords-180920.pdf