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Reform recommended for lease extension and enfranchisement

The Law Commission has published a summary paper of changes it recommends for the law relating to extending the leases of houses and flats and buying the freehold of buildings containing flats.

The proposals are an attempt to strike a difficult balance between reducing the price payable by leaseholders who want to buy their freehold or extend their lease,  while ensuring that Landlords (who cannot refuse an application while qualifies under the current legislation) are adequately compensated for losing their interest in the property.

Some of the main changes proposed are :

  • reducing premiums payable by leaseholders by introducing a simple formula for valuation (such as a ground rent multiplier or a percentage of capital value);
  • a fixed costs regime so that leaseholders know the costs they are liable for at the outset;
  • all disputes to be determined by the Tribunal (currently some disputes are dealt with in the county court which increases complexity and costs);
  • a right for leaseholders on an estate of houses and flats to join together to purchase the freehold;
  • powers to require contributions once the freehold has been purchased allowing estates to continue to be maintained.

For extending leases :

  • no minimum period of ownership (for flats this is currently 2 years),

and for buying a freehold containing flats :

  • a right to join an earlier application ( to stop leaseholders being locked out of ownership).

The current law has been criticised for being complex with separate procedures applying to each of the different enfranchisement rights. The proposals recommend a single procedure for enfranchisement to simplify the process and improve transparency to ultimately provide a better deal for leaseholders .

The Commission is inviting responses from Leaseholders and Landlords to the proposals and the deadline for replies is 7th January 2019.

SLC Solicitors are experts in this area and can assist you with lease extension or enfranchisement claims. We can offer fixed fees and  value for money guidance on the complex regimes in place.  If you would like more information please contact Analise Broomhall


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