Reforms set to protect landlords with leaseholds
Landlords who own flats in blocks under leasehold will benefit from more security of tenure and control over their own properties if proposed changes to leasehold law become a reality.
Last year the Ministry of Housing, Communities and Local Government estimated that, in 2014-15, 1.7 million leasehold dwellings were let in the private rented sector.
The government set up a review after it emerged that a number of leasehold sales were tying leaseholders to extortionate increases in ground rents.
Last October a review asked what forms of regulations of letting and managing agents should take to ‘best protect and empower tenants and leaseholders.’
Leasehold has been described as owning the house, but not the land it is on - so the buyer owns a property for a fixed number of years on a lease from the landlord.
The Law Commission's proposals include reducing the price leaseholders pay to the landlord by changing the formula used to calculate the cost, improving the right for leaseholders to buy the freehold from their landlord, and introducing an alternative right to purchase unlimited longer lease extensions without a ground rent.
It also suggested making the enfranchisement procedure simpler to understand, as well as removing the need for leaseholders to have owned the lease for two years before making a claim.
The proposals recommend potentially scrapping whether leaseholders should contribute to their landlord's legal costs, or a cap on the maximum amount they should pay.
The legal watchdog says that landlords who own freeholds will be fairly compensated.
Justin Madders, Labour MP for Ellesmere Port and Neston, is introducing a bill in the autumn to set the cost of freehold at 10 times annual ground rent.
These new proposals come after ministers recently announced measures to ban the sale of new houses on a leasehold basis.
Law Commissioner Nick Hopkins said: "Enfranchisement offers a route out of leasehold but the law is failing homeowners: it's complex and expensive, and leads to unnecessary conflict, costs and delay.
"We've heard of untold stress caused to homeowners who have had to put their lives on hold because of issues with their leases.
"Clearly that's not right, and our solutions for leasehold houses will provide a better deal for leaseholders and make sure the law works in the best interests of house owners."
The Law Commission will publish a consultation paper in September which will be open to the public.