The Law Commission recently proposed a series of reforms designed to tackle certain issues in the leasehold market with the view of making the lease extension and freehold acquisition process, known as enfranchisement, more efficient. In addition, the Law Commission were specifically asked to provide options to reduce the price payable by leaseholders to buy their freehold or extend their lease whilst also ensuring adequate compensation is paid to landlords in respect of their property interests.
Arguably, this task for the Law Commission was a double edged sword. There is perhaps no course of action that does not have some draw back. It was impossible for the project to be a neutral piece of work, otherwise it wouldn’t achieve anything. It was acknowledged by the Law Commission that the proposals were intended to favour leaseholders but that those proposals should also benefit landlords to a large extent.
Since the Law Commission issued their consultation paper, either Brexit took over or the proposals were not radical enough, as there did not seem to be too much commotion from any side. Whilst we wait to see what may lie ahead, it is important to note that all of the existing enfranchisement rights are retained in the proposed new regime and therefore leaseholders should not be concerned about their rights being lessened or limited in any way. The proposals are for a streamlined system and to remove current difficulties; they therefore set out to enhance the existing rights of leaseholders.
The overriding objective seemed to be to give leaseholders more choice, based on simpler and less costly options. Such proposals included the two year rule of ownership being abolished, limiting contribution to landlords’ costs, longer lease terms and all disputes to be determined by one Tribunal.
This project is an examination of leaseholder’s enfranchisement rights. The Law Commission have given it careful consideration and analysis but now require help from stakeholders in getting it right. There is no final recommendation for reform in the consultation paper as that will be a decision for the Government. Legal reform can be a driver for reform of the economy and will have an impact on the market. If you have something to say, now is your time. The consultation period ends on 7 January 2019. The Law Commission want to hear views and you can provide your opinion via the Law Commission website and use the online response form which can be found here.
Iris-Ann Stapleton, Partner, Enfranchisement at Streathers LLP