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Significant Leasehold Reform To Transform Future of Home Ownership

05.08.20

The Law Commission has unleashed a suite of important leasehold reform proposals, with ambitions “to transform the future of home ownership in England and Wales”.

If enacted, the reforms would make it easier and cheaper for homeowners to buy their property’s freehold or extend their lease, allow more say in property management, and pave the way for making commonhold the “preferred alternative” to leasehold for new home sales. This would mean that flats are sold with a freehold title as part of a commonhold, as in most other countries around the world.

It’s been estimated that there are around 4.3 million leasehold homes in England alone.

Set out in three reports, the Law Commission suggests that “reinvigorating” commonhold is the most “fit for purpose” way of fixing widespread and often harrowing leasehold problems for new-build properties, while giving existing homeowners “a route out” of leasehold.

The Commission also recommends overhauling the enfranchisement regime, to make it more simple and cheaper for leaseholders to buy the freehold or extend their lease. And it proposes an easier process 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.

The Government announced a suite of changes to the leasehold system last year, including a ban on leaseholds for new-build houses. This followed a Select Committee report that concluded that the UK’s leasehold system is “not working in consumers’ best interests and needs to be reformed”.

Professor Nick Hopkins, Commissioner for property law: “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.”

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