Leaseholders advised not to wait for reform - it could take years

Wholesale reform of leasehold issues is still some years away, despite recent proposals by the Law Commission and pledges by the government. 

That’s the view of Leasehold Law, set up to help leaseholders pursue their right to enfranchise.

The Law Commission recently published an 860-page report offering over 100 recommendations on enfranchisement reform for the government to consider. 

Belinda Walkinshaw, managing partner of Leasehold Law, says: “Leasehold reform is a complex process, and we expect it may be several years before any of these recommendations become law. The fight is far from over and there is no guarantee that the outcome of this process will deliver the reforms needed to make the property market fair for leaseholders.  

“We now call on the government to fulfil its promise to make extending a lease or purchasing a freehold ‘much easier, faster and cheaper’. It is essential that decision makers reform the law as quickly and effectively as possible, as any protracted delay will only work against leaseholders.” 

 Leasehold Law says the key recommendations which it believes would strengthen leaseholders’ rights are: 

- abolishing the requirement for leaseholders to own their flat for two years before they can apply to purchase the freehold - this will enable leaseholders to enfranchise immediately and reduce the potential for the freehold to be sold on to other investors during the initial two-year period;

- increasing the term from an additional 90 years to a new term of 990 years will save leaseholders the considerable cost of repeatedly extending short leases;

- restricting non-statutory lease extensions to only include the same (or very similar) terms as the existing lease will deny a landlord the opportunity to introduce new onerous provisions into the lease terms;

- buying out the ground rent under the existing lease will provide a cheaper alternative to paying the premium for a lease extension and free leaseholders from the ongoing responsibility to pay ground rent, especially where they already have relatively long leases and so don’t require an extension of the term but have onerous ground rent provisions.

Walkinshaw says any leaseholder whose lease is approaching the 80-year mark should not rely on the Law Commission report and waiting for any consequential reforms, but should move swiftly to extend their lease now, as the cost to extend their lease will skyrocket once it falls below 80 years.