ALEP welcomes deal for a fairer deal for leaseholders

Leasehold reforms have been recommended by the Law Commission to create a fairer deal for leasehold homeowners, in a move which has been welcomed by The Association of Leasehold Enfranchisement Practitioners (ALEP).

In England and Wales properties are normally bought and sold on either a leasehold or a freehold basis. Leasehold means the buyer owns a property for a fixed number of years on a lease from a freeholder. Enfranchisement is the process leaseholders can use to purchase the freehold, or extend the lease.

• The government estimates there are more than 4million leasehold properties across England, including 1.4million houses
• More than 6,000 responses were submitted to the recent government consultation on unfair leasehold practices. The vast majority of responses expressed their concerns about buying and living in a leasehold property.

Currently the process of extending or purchasing the lease is expensive and complex – the result of more than 50 Acts of Parliament – and there are different rules for houses and flats. This, says the Law Commission, causes “unnecessary conflict, stress, cost, and delay”.

Their proposals include:

• making it easier for homeowners to purchase the freehold of their property
• making it cheaper for leaseholders to extend their lease or purchase the freehold, while providing sufficient compensation to landlords
• new rights for leaseholders of houses to purchase longer lease extensions without a ground rent
• removing the requirement that leaseholders must have owned their house for two years before they can exercise their right to purchase or extend the lease.

ALEP Director Mark Chick, a partner at Bishop & Sewell, said: “The announcement is encouraging, and the reforms suggested by the Law Commission will make an important contribution towards the government’s stated objective to improve transparency and fairness in the residential leasehold sector. It is also clear that the Law Commission will seek to balance leaseholders’ rights with the interests of freeholders, to ensure that sufficient compensation is paid to landlords where leasehold house owners pursue enfranchisement.”

Law Commissioner Professor Nick Hopkins said: “Enfranchisement offers a route out of leasehold but the law is failing homeowners: it’s complex and expensive, and leads to unnecessary conflict, costs and delay. We’ve heard of untold stress caused to homeowners who have had to put their lives on hold because of issues with their leases. Clearly, that’s not right, and our solutions for leasehold houses will provide a better deal for leaseholders and make sure that the law works in the best interests of house owners.”

The Law Commission is due to publish a consultation paper on leasehold agreements this month, proposing a new, single regime for leasehold enfranchisement, designed to benefit leaseholders of houses and flats. This will be subject to a full public consultation and a final report will be published in 2019.

Mark Chick added: “The success of the Law Commission’s reform agenda relies on collecting evidence on which to base its proposals to Government. As the leading association for enfranchisement practitioners ALEP will be contacting all its members to explain the importance of the Law Commission's forthcoming consultation and urge them to take part.”

What to do if you own a leasehold property

• First check the length of the lease by examining the title summary, which can be downloaded from the Land Registry for just £3.
• It becomes more expensive to extend or purchase a lease once it drops below 80 years. If your lease is already shorter than this or is getting close to this point, you should get in touch with a leasehold legal expert as soon as possible. Find out how to choose a leasehold legal expert with our checklist here.
• If your lease is much longer than 80 years, you may prefer to sit it out and wait to see what changes the consultation brings.

There’s more information about choosing an expert to value your lease extension here:

How to choose an expert to value your leasehold extension - ALEP