The Law Commission publishes its terms of reference for leasehold reform.

Just over half a century since the founding Leasehold Reform Act 1967, the subject of leasehold is being reviewed by the Law Commission as part of its 13th Programme of Law Reform.

The government has expressed its commitment to overhaul what it sees as an unnecessarily complex system and reinvigorate commonhold.

The inherent issue has always been that a leasehold property is a wasting asset subject to ground rent and service charges and in the case of flats often gives rise to dispute over management of the building.

The law should be updated to correct irregularities and give cohesion to what has become a fractured area.

Reform should include:-

  1. Prohibition on new leasehold houses;
  2. Prohibition on onerous ground rents;
  3. Abolition of the 2 years’ ownership rule for lease renewals under the Leasehold Reform Housing and Urban Development Act 1993 (‘the 93 Act’) (it doesn’t apply to the statutory right to acquire the freehold so why does it for lease renewals?);
  4. Abolition of the 1 year exclusion period following withdrawal by a tenant under the 93 Act;
  5. Repeal of the Right of First Refusal under the Landlord and Tenant Act 1987 (commonly viewed as open to challenge and redundant given the statutory right to acquire the freehold);
  6. Legislation of a methodology for calculating the premiums payable for lease renewals and freehold acquisitions to avoid protracted disputes over valuation.

These are to name a few.

An unprecedented number of leasehold cases have worked their way to the Court of Appeal and the Supreme Court over the last few years suggesting that time is ripe for change.

However, reform of law is often driven by political appetite and the history of leasehold reform has shown that a change in governing party can sideline reform for many years. That said, it seems there is a cross-party consensus that reform is needed.

Please see below a link to the Law Commission’s terms of reference for leasehold enfranchisement and commonhold.

https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2018/04/PUBLISHED-Residential-leasehold-terms-of-reference-180418.pdf

For advice on all aspects of leasehold (including its reform) or commonhold please contact Dominic Danvers on 020 3861 5154 or ddanvers@meaby.co.uk.

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