Main project: Residential leasehold and commonhold
Current project status
The current status of this project is: Analysis of responses.
List of project stages:
- Analysis of responses
- Initiation: Could include discussing scope and terms of reference with lead Government Department
- Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
- Consultation: Likely to include consultation events and paper, making provisional proposals for comment
- Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
- Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations
We published our report on valuation in enfranchisement (“Report on options to reduce the price payable”) on 9 January 2020.
This report follows our Consultation Paper on leasehold enfranchisement reform: “Leasehold home ownership: buying your freehold or extending your lease”. We are continuing to finalise our recommendations for reforming all other aspects of the enfranchisement regime and aim to report on those issues in Spring 2020.
Background to the project
Our project on leasehold enfranchisement involves a review of leaseholders’ rights to:
- purchase the freehold of their house
- participate, with other leaseholders, in the collective purchase of the freehold of a group of flats
- extend the lease of their house or flat
Responses to our 13th Programme consultation criticised the current legislation as being complex, inconsistent and costly.
Terms of reference
Government has asked us to review the enfranchisement process to make it simpler, easier, quicker and more cost effective, and to examine the options to reduce the price payable by leaseholders to enfranchise.
Our full terms of reference are available here.
We published our Consultation Paper on leasehold enfranchisement reform, “Leasehold home ownership: buying your freehold or extending your lease” in September 2018. In it, we made provisional proposals for reform designed to provide a new scheme of qualifying criteria for enfranchisement rights, enhance and improve the enfranchisement rights themselves, and provide a new unified procedure for all claims.
The provisional proposals would:
- provide a better deal for leaseholders by making enfranchisement easier, quicker and more cost effective
- reform the existing rights of leaseholders, including removing the separate rules for houses and for flats
- simplify, and reduce the legal and other costs of, the procedure for acquiring a freehold or an extended lease
As requested by Government, we also set out options for reducing the price payable by leaseholders to exercise those rights, whilst ensuring sufficient compensation for landlords to reflect their legitimate property interests. We invited consultees’ views on our provisional proposals.
Report on options to reduce the price payable
We have now published our report on valuation in enfranchisement. This report puts forward three alternative schemes for determining the premium, which will make enfranchisement cheaper, saving leaseholders of houses and flats money, whilst ensuring sufficient compensation is paid to landlords to reflect their legitimate property interests. Each scheme uses a different basis to determine the price of enfranchisement, and facilitates further reforms to make the process simpler and to reduce uncertainty.
Alongside the three schemes, we have put forward a range of other options for reform. These include:
- Prescribing the rates used in calculating the price, to remove a key source of disputes, and make the process simpler, more certain and predictable.
- Helping leaseholders with onerous ground rents, by capping the level of ground rent used to calculate the premium.
- The creation of an online calculator for determining the premium to make it easier to find out the cost of enfranchisement, and reduce uncertainty around the process.
- Enabling leaseholders who are collectively enfranchising a block of flats to avoid paying “development value” to the landlord unless and until they actually undertake further development.
As well as reducing the price, these options would clarify and simplify the law, making the process of leasehold enfranchisement easier and less expensive to operate. The report also explains the limited role that simple formulae – such as a multiple of ground rent – could play in delivering reforms, while explaining that their wider use is not possible under the UK’s human rights laws.
This report does not express a view on which scheme and which options for reform should be adopted, as this is ultimately a decision for Government and Parliament.
The links to access the valuation report and the summary are at the top of this webpage. Further background documents are referred to below.
We are continuing to finalise our recommendations for reforming all other aspects of the enfranchisement regime and aim to report on those issues in Spring 2020.
By email to: firstname.lastname@example.org
Area of law
Property, family and trust law
Professor Nicholas Hopkins