Leaseholds set for further reforms

Whichever party gets into government in the upcoming General Election, more leasehold reforms are on the cards.

The Leasehold and Freehold Reform Bill was rushed through parliament before it was disbanded, which scrapped leaseholds on new houses but not flats, and enabled leaseholders to challenge their freeholders for poor practice via a redress scheme.

However it failed to cap ground rents, something that was pushed for by departing housing secretary Michael Gove.

The Labour manifesto says: “Labour will act where the Conservatives have failed and finally bring the feudal leasehold system to an end.

“We will enact the package of Law Commission proposals on leasehold enfranchisement, right to manage and commonhold.

“We will take further steps to ban new leasehold flats and ensure commonhold is the default tenure.

“We will tackle unregulated and unaffordable ground rent charges. We will act to bring the injustice of ‘fleecehold’ private housing estates and unfair maintenance costs to an end.”

Meanwhile the Conservative manifesto says: “We will complete the process of leasehold reform, to improve the lives of over four million leaseholders. We will cap ground rents at £250, reducing them to peppercorn over time.

“We will end the misuse of forfeiture so leaseholders don’t lose their property and capital unfairly and make it easier to take up commonhold.”

Mark Chick, director of ALEP (the Association of Leasehold Enfranchisement Practitioners) and a partner at Bishop & Sewell LLP, said: “Policy objectives that can be gleaned from the manifestos clearly indicate the suggestion of capping them at the very least.

“ALEP members did not favour an outright ban on ground rents when surveyed in the early part of this year – and as we have said before the suggestion of a cap rather than an outright ban might be seen as a victory for common sense.

“For those looking to achieve a ban on ground rents under existing leases this is more likely to be resistant to a challenge on human rights grounds. Also, the impact on the property market of a phased in cap and eventual ban or ‘sunset’ clause will allow some time for adjustment.

“What we don’t know at this stage is what the appetite of some freeholders may be to challenge these leasehold reforms together with the proposed valuation changes that the Leasehold and Freehold Reform Act 2024 will bring in.

“This can only really be assessed once the relevant compensation rates in the new valuation methods in the new Act have been set.”

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