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Law Commission publishes package of reforms to ‘transform’ leasehold system

A series of proposals aimed at transforming the leasehold system and making it easier for individuals to own their flat outright, have been published by the Law Commission.

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Plans could “transform future of homeownership” (picture: Getty)
Plans could “transform future of homeownership” (picture: Getty)
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A series of proposals have today been published by the Law Commission that is said will transform the leasehold system and make it easier for individuals to own their flat outright #ukhousing

“This government is determined to improve transparency and fairness in the residential leasehold market to help thousands of leasehold homeowners up and down the country, as well as future homebuyers” @LukeHall #ukhousing

“It is clear that the current leasehold system often fails resident leaseholders and these reports will give us a better understanding of the issues involved” – @JulieJamesAM #ukhousing

The Law Commission, which was asked by the government to produce proposals to improve the leasehold law last year, said the proposed changes will “transform the future of homeownership” and help the millions of people currently living in leasehold homes in England and Wales.

Three reports have been published by the independent body outlining a series of proposed legislative changes in the areas of leasehold enfranchisement, the right to manage and commonhold respectively.

On the topic of leasehold enfranchisement, which is the process through which leaseholders buy the freehold or extend their lease, the commission recommended creating a new right to a lease extension of 990 years, rather than the 90 or 50 years allowed under the current law.

A series of proposals were also recommended to make it easier for leaseholders to buy the freehold.

In the Law Commission’s Right to Manage (RTM) report, it recommended the government expand the criteria for who can qualify to take over the management of their building from the freeholder.


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It also suggested the government improve the information and training available to residents who choose RTM and remove the obligation on leaseholders to pay the landlord’s costs from the process.

In its final report, the Law Commission made a series of proposals that it said would make commonhold the preferred alternative to leasehold for owners of flats.

These include enabling the conversion to commonhold without the agreement of every person and creating a regime for financing commonholds, for example by requiring a fund for future repairs.

The commission also recommends that shared ownership leases be granted in commonholds.

In England and Wales, people currently almost always own their home on either a freehold or leasehold basis.

Freehold is ownership that lasts forever and gives extensive control of the property, while leasehold provides time-limited ownership – for example on a 99-year lease – and control of the property is shared with the freehold owner.

Commonhold is an alternative to leasehold that allows residents to own the freehold of their individual flat and manage the shared areas of a building through a company.

The leasehold process has attracted huge criticism from all ends of the political spectrum as many believe the system to be inherently unfair.

One common complaint is about the spiralling costs of ground rents, which leaseholds are required to pay to the freeholder semi-regularly. Many leaseholders have also been hit with sky-high bills to fix dangerous cladding in the aftermath of the Grenfell Tower fire.

Nick Hopkins, property law commissioner, said: “The leasehold system is not working for millions of homeowners in England and Wales. We have heard how the current law leaves them feeling like they don’t truly own their home.

“Our reforms will make a real difference by giving leaseholders greater control over their homes, offering a cheaper and easier route out of leasehold, and establishing commonhold as the preferred alternative system. The reforms will provide a better deal for leaseholders and make our homes work for us, and not somebody else.”

Luke Hall, minister for rough sleeping and housing, said: “This government is determined to improve transparency and fairness in the residential leasehold market to help thousands of leasehold homeowners up and down the country, as well as future homebuyers.

“We are clear that the current system needs reform, which is why we asked the Law Commission to carry out this important work. We will carefully consider the Law Commission’s recommendations, which are a significant milestone in our reform programme, as we create a better deal for homeowners.”

Julie James, Welsh housing minister, said: “These comprehensive and much-anticipated reports mark a significant step towards much-needed reform. It is clear that the current leasehold system often fails resident leaseholders and these reports will give us a better understanding of the issues involved; we now need to take the time to consider them carefully.

“The Law Commission has undertaken a mammoth task in unpicking the current law, engaging widely on the options for change, and putting forward comprehensive recommendations and I’m grateful to them for their excellent work.”

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