Lease Extensions and Collective Enfranchisement (buying the freehold of your building) have long been part and parcel of the property market, but are an area where the expertise of a valuation surveyor and a solicitor are strongly recommended.
Housing Minister Robert Jenrick recently announced some bold changes to leasehold law that are intended to make things cheaper and simpler for leaseholders.
In the press release of 7th January the following proposals are mentioned:
- Increasing the length of a statutory lease extension to 990 years.
- Abolishing ‘marriage value’ and fixing calculation rates.
- Restricting ground rents to zero for new leases (as seen in the retirement homes sector and new developments).
As specialists in this area of property, in 2019 we were invited to provide our feedback to the Law Commission on future law reforms. The consultation was far-reaching for leasehold law, and its findings were published in two parts in January and June 2020. However, following the reports, it was still not clear as to exactly what changes would be adopted and when they would happen.
Several of the proposals mentioned are radical and perhaps ‘headline grabbing’ in nature. As people who have long followed the leasehold saga, we openly advise leaseholders and freeholders alike not to ‘sit on the fence’ to wait and see what happens.
Whilst Mr. Jenrick’s proposals sound positive for leaseholders, there is no concrete timescale mentioned, nor a confirmation of exactly how these proposals will appear in law. As time ticks on, leases get shorter, and the property market grows – therefore the benefits of waiting may not actually be beneficial at all.
We also believe there could be a number of complications with unpicking the status quo. This is unlikely to be a simple tinkering to the system - especially when it comes to measures such as abolishing ‘marriage value’ which is likely to mean huge losses for freeholders.
As specialists in this field, we recognise that making lease enfranchisement cheaper for leaseholders may be a step in the right direction to curb the scandal and malpractice that have too often made the nightly news. However, we do need to be careful that we are not misled by ‘big promises’ in the latest press release from the government. More importantly, it mustn’t lead people to becoming complacent about their leasehold property. Good advice is available and most of it is completely free, so you’d be silly not to at least ask!
Every lease extension and collective enfranchisement is different and each one should be considered alongside the needs and objectives of our clients – that’s you. Don’t sit on the fence and don’t be afraid to give us a call on 0207 591 8746 or email us at firstname.lastname@example.org.
The Douglas&Gordon Professional Valuations team are members of the Association of Leasehold Enfranchisement Practitioners (ALEP) and registered with the Royal Institute of Chartered Surveyors (RICS) as chartered valuers.