A ground-breaking new intervention from the Law Commission has set out sweeping reforms to leasehold laws, affecting millions of leaseholders across the UK.
Making leases easier to extend and freeholds easier to buy, making commonhold workable, and taking control of a block of flats are all included in the review, which was published on 21 July.
Spread across three reports, the proposals have been met with mixed reviews from experts after years of increasingly troubling practices from rogue landlords and concerns about rising costs for leaseholders.
Leigh Shapiro, Leasehold Enfranchisement partner at Irwin Mitchell said: “This was always going to be a huge undertaking and the Law Commission has certainly delivered. Clearly, many leaseholders will be very buoyed by many of the recommendations.
“However, while for some there are clearly issues with the leasehold system and these certainly need addressing, the Law Commission has not fully addressed the fact that for many the system does in fact work very well and is an established and well protected form of home ownership, particularly where there are elements of communal living involved. Great care will need to be taken when drafting any new legislation to ensure those leaseholders are also protected and their interests are not devalued.
“There will also certainly be some leaseholders concerned by the potential for just 50% of their neighbours to be able to change the tenure of their ownership to a commonhold unit without their agreement and we wonder whether this will give rise to any human rights claims.
“As ever, the devil will be in the detail of the drafting of the legislation – particularly when it comes to what exactly the cost will be to the leaseholders.”
Specialists at Irwin Mitchell consider that the recommended reforms to commonhold law are a step in the right direction for bringing commonhold into regular use for properties, but note that commonhold won’t work for every development scheme or group of property owners, and that the proposals need to be considered carefully to make sure that they don’t disadvantage particular groups.
Brian Dowling, a Real Estate partner at Irwin Mitchell said: “Overall, it is encouraging seeing that the technical defects with commonhold have now been identified and are likely to be fixed. This should encourage more major lenders to take commonhold homes as security for loans, and encourage more of its take-up.
“We were grateful for the opportunity to comment on the Law Commission’s proposals and will consider this major report with interest. The Law Commission and Government do need to remember that we have a diverse housing market, and that our planning and housing policies encourage mixed-use and multi-tenure schemes.
“There are risks in these proposals for investors in commercial space, and investors and stakeholders in specialist housing, such as affordable housing or ‘build to rent’. These investors could find that the asset and rights that they have brought change without their consent.
“Government will be cutting across their planning policies, and discouraging investment in mixed use schemes and placemaking if they don’t ensure that parties other than private residential flat owners are protected under these reforms.”
