In December of 2017 the Government announced it would prohibit nearly all future sales of new build leasehold houses and would be proposing modifications to the existing rules applicable to leasehold properties to circumvent what it has referred to as “feudal practices” and “unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.”
Although for flats leasehold ownership is often practical, the Government sees little reason, other than additional profits for developers, for houses to be sold on a leasehold basis. A ban on leasehold house sales will only protect future purchasers of newly built properties and would not present any respite for the millions of people in the country who already own leasehold houses.
To assist existing leasehold homeowners the Government has asked the Law Commission to prioritize modifications to the current enfranchisement scheme. Leasehold property owners have “enfranchisement rights” which include a right to purchase the freehold interest in a property or to extend the leasehold term. However, at present, the rules relating to enfranchisement are complex, technical and burdensome.
The Law Commission has published a summary of proposed modifications to the leasehold enfranchisement scheme relating to leasehold houses. The modifications proposed are aimed at simplifying the regime to make enfranchisement more accessible for leasehold property owners and include recommendations for the removal of unnecessary technical hurdles, modifications to the eligibility rules, and simplifying the enfranchisement procedure. Under the current scheme a leasehold owner must have owned the property for at least two years before the rights can be exercised, however, the proposed changes would do away with this time requirement to allow leasehold house owners to seek immediate relief.
At this stage the proposed modifications are just that, proposals, however the Law Commission has advised that an in depth Consultation Paper will be published this month and it is our hope that the proposals will lead to substantive changes in the enfranchisement regime which will make the enfranchisement process simpler and less expensive for our clients.
If you have any questions please contact our Conveyancing team.