LEGAL COMMENT: Law Commission proposes major reforms to leasehold law
Chris Grady from Weightmans comments on the news..
The Law Commission has announced new proposals that will make it easier and cheaper for homeowners to extend or buy their leasehold after a government-commissioned review.
What is a leasehold?
Unlike a freehold, purchasers of leasehold properties own the home itself but not the land it stands on, and rents this land until the lease expires. These can vary in length but are usually 99, 125 or 999 years. This ordinarily means payment of a ground rent to the owner of the land, plus potential service charges for communal areas.
Christopher Grady, Partner and residential development specialist at Weightmans LLP said:
"The Law Commission has offered clarity and the prospect of concrete regulation to an area of the residential property market that currently lacks oversight. If enacted, its proposals would improve the current enfranchisement system, making the process of purchasing a freehold, or obtaining an extended lease much clearer and more affordable for consumers.
"The commission has recommended a number of ways this could be done in practice, but whatever option the government chooses, the need for customers to undergo a potentially lengthy, costly tribunal and/or negotiation process, should be removed – a development that should be welcomed.
"In my experience volume housebuilders have been prioritising freehold sales and moving away from the leasehold model for some time now, in response to consumer concerns. My clients have been working hard to make leasehold terms more customer centric for sales still in the pipeline, such as extending the length of leasehold agreements, ensuring ground rent reviews are index-linked, or not charging any ground rent at all."