Following on from my previous January (valuation) and July (law) blogs on the Law Commission’s recommendations to government on enfranchisement reform, one of the most interesting question in respect of enfranchisement was put by Anthony Radevsky (Falcon Chambers) in respect of the highly sensitive issue of rising ground rents.
The question was whether government would rush through the one proposal of capping ground rents in lease extensions to a recommended 0.1% of freehold value particularly pertinent in leases subject to onerous ground rents. These are ground rents that, say, double every 10 years – an issue in itself that prompted government to ask the Law Commission to look at the wider issue of changing the law on enfranchisement in the first place.
The answer was as this change would require a primary change in legislation – it would not be worth Parliament’s time in enacting just one sub option (of putting a cap on ground rents) out of the many options put by the commission in its recommendations as to changes to make the whole process of enfranchisement | extending one’s lease cheaper.
There is also the other side of the coin to consider where some tenants would prefer not to have the onerous ground rents payable under their leases removed in order to reduce the premium payable when extending their leases.
Another interesting point made was if areas of litigation in respect of enfranchisement are to be moved from the courts to the First-tier Tribunal where each side pays its own costs – then it seems somewhat unfair for the ultimate winning party (which could take many steps through appeals) to not recover its costs especially where, say, landlords can come up with imaginative side issues to pro long the agony!
Finally, there are no timings at all as to when government is likely to bring about the changes proposed by the commission. It is also out of the hands of the Law Commission to influence government as to when it should enact the changes.