Leasehold Law: Where are we now? LOOKING AHEAD
BY ANDY FINKEL Partner, Residential property
Shortly before the recent general election, the former government passed the Leasehold and Freehold Reform Act 2024 (“LAFRA”). The current government needs to resolve some complicated issues regarding valuation criteria and pass some secondary legislation in order to bring LAFRA into force. In particular, issues regarding deferment rates and capitalisation rates (two of the elements on which calculation of the premium payable for astatutory lease extension are based) remain unresolved and are unlikely to be resolved any time soon. The press statement on 21 November 2024 by the Minister for Housing, Communities and Local Government, Matthew Pennycook MP, indicated an intention to introduce and implement some reforms in 2025. The main plank of their plans to reform (abolish?) leasehold ownership will be a Commonhold Reform Bill in the second half of 2025. This is not a simple fix and will require public consultation and probably much debate before any tangible changes are implemented. The idea of Commonhold is that leases in a building are converted to indefinite Commonhold instead of enfranchisement followed by lease extensions. There is a Commonhold Association (i.e a Limited Company whose members are the flat-owners) and a Commonhold Statement, which is a constitution which will contain some prescribed provisions but which can be added to by majority vote of the Commonholders. Commonhold has existed in England and Wales since 2002, but has been largely rejected by property owners. At present, it requires 100% acceptance by flat-owners and their mortgage lenders to be effective. The current proposals do not address some of the practical problems of commonhold; in particular, who will pay the landlord for the share
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