The Law Commission published its report on 21 July 2020 on leasehold reform setting out various issues that they considered were necessary to tackle issues and problems that leaseholders currently face. These included changes to the processes of obtaining a lease extension, or collectively buying the freehold (enfranchisement) or the right to manage; making these avenues cheaper and simpler. It also proposed changes to the currently little used commonhold system, to make it more attractive and easier to implement, so that gradually, the need for leaseholds would be diminished or extinguished altogether.
The recommendations obviously made leaseholders wonder if they should wait for these reforms to be enacted, rather than to seek lease extensions or enfranchisement now.
There are a number of considerations to take into account before you decide to wait for something that may never happen, or if it does, it is not as you had hoped.
Therefore, it could be a good time for you to extend your lease or buy/sell your freehold. Certainly, if you already have a short lease, it could be very risky to wait even longer for legislation to be enacted.
There has been a recent backlash against onerous ground rents for leasehold houses, particularly in new build schemes in the North West where buyers were not fully aware of what they were buying. That has led to the calls for an overhaul of the leasehold system in its entirety and the Law Commission’s report. Whilst granting leases for houses is not a particularly good idea where there are no shared or common facilities or areas, the leasehold system has worked for centuries, albeit with flaws and problems (like any other system). That said, demonising one system entirely to fix one particular problem is not necessarily the best way forward. It remains to be seen as to whether commonhold will be become popular, unless it becomes mandatory. In blocks of flats with numerous or large shared facilities and areas, it is optimistic to think that every owner is going to agree with each other and get involved with management of the building. Sometimes, a third party landlord who ensures the smooth running of the building and recovery of the service charges is the best way to deal with things.
Greenwoods Legal LLP is a Limited Liability Partnership, registered in England, registered number OC306912. Our registered office is Queens House, 55-56 Lincoln’s Inn Fields, London, WC2A 3LJ. A list of the members’ names is available for inspection at our offices in Peterborough, Cambridge and London. Authorised and regulated by the Solicitors Regulation Authority, SRA number 401162. Details of the Solicitors’ Codes of Conduct can be found at www.sra.org.uk. All instructions accepted by Greenwoods Legal LLP are subject to our current Terms of Business. VAT Reg No: 161 9287 89.