The second part of the Law Commissions proposals into reform of leasehold enfranchisement law were published on 21st July.
Below is a link to the summary of its proposals:-
https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2020/07/ENF-Report-final-N8-3.pdf
Whereas the full report can be found by following this link:-
https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2020/07/ENF-Report-final-N8-3.pdf
The main proposals if enacted are:
Flats and Houses – will be treated under the same regime and referred to as units. Many more properties that previously would not have qualified as houses will be caught.
Collective claims – the hitherto 25% non- residential use in a building eligible for collective enfranchisement is increased to 50%.
Underhand | Overhang – it will no longer be a bar to a claim if the subject premises under or overhang other premises owned by the freeholder.
Hearings – all disputes will be dealt (initially) with the First-tier Tribunal (Property Chamber) in their entirety.
Costs – freeholders will no longer be able to recover any non-litigation costs.
Lease extensions – a new uniform right to extend the lease to 990 years (not 90 years in addition to the current unexpired term as at the valuation date) at a peppercorn ground rent.
Onerous ground rents – if government doesn’t introduce a cap on ground rent (link Valuation blog below), a proposal to allow the leaseholders with onerous ground rents to extend the term of their leases without having to buy out their ground rents.
Two year ownership rule – abolished.
Leaseholders already owning very long leases – (250 years suggested) will have the right to buy out the ground rent under their leases without having to extend the term.
Valuation – in a separate report, the Law Commission set out its recommendations as to reducing the premiums payable on which I have reported already in my January blog. click on link below:
Law Commission’s long awaited report on enfranchisement published today.
No one knows if and when government will find time to respond to these proposals especially given the current Coronavirus situation and Brexit. Many of the proposals are controversial and if enacted are probably at least 3 -5 years away.
Any lessees owning very short or leases close to the 80 year ‘cliff edge’ should not delay. Also given recent market ‘adjustments’ due to Covid-19, now is without a good time to buy your freehold | extend your lease.
Please do not hesitate to contact me if you have any questions.