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Tue, 20 October 2020

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Millions of leaseholders to benefit from Law Commission reforms

Millions of leaseholders to benefit from Law Commission reforms

The Law Commission's recommended reforms work in tandem with planned changes from the Government to create fit-for-purpose home ownership across England and Wales | Credit: PA Images

Law Commission

3 min read Partner content

The Commission’s reforms will lay the foundations for future home ownership to be freehold and tackle some key issues that existing leaseholders currently face.

The Law Commission of England and Wales has today published recommendations to transform home ownership for millions of people in England and Wales.

It has been estimated there are at least 4.3 million leasehold homes in England alone.

If enacted, our reforms would help those owners and pave the way for a system where flats are sold with freehold title (as part of a commonhold).

These reforms – laid out in three reports – work in tandem with planned changes from the Government to create fit-for-purpose home ownership across England and Wales.

The Commission’s reforms will lay the foundations for future home ownership to be freehold and tackle some key issues that existing leaseholders currently face.

The Law Commission reforms recommend reinvigorating commonhold – which allows people to own a flat forever, with a freehold title and no landlord – as an option to replace leasehold for newly-built flats. The recommended reforms would also give leaseholders a route out of leasehold by making it easier to convert to commonhold.

Improving the current system for existing leaseholders  

The Law Commission propose improving the process by which leaseholders can buy the freehold or extend their lease (“enfranchisement”). Our recommendations would create an improved enfranchisement regime that would be simpler and cheaper for leaseholders in flats and houses.

Additionally, we recommend making it easier and cheaper for leaseholders to take over the management of their building without buying the freehold, by exercising the right to manage (“RTM”). The RTM lets leaseholders take control of services, repairs, maintenance, improvements, and insurance.

During our projects we have heard from leaseholders about a wide range of problems they have experienced with the current law. Our terms of reference are focused on specific areas of the law and on their own cannot tackle every issue that leaseholders face. But they would combine with work from the Government (for example banning the use of leasehold for most houses) to make home ownership fit-for-purpose.

Professor Nick Hopkins, Commissioner for property law 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 MS, Minister for Housing and Local Government, Welsh Government, 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 have 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.”

To find out more, click here

 

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