Practice Points to Note
However, no change is without its complications and it has become apparent that practical problems related to the ‘registration gap’ may still scupper any progress. The registration gap is the time lag between the completion of a transaction and the official registration of the transaction by the Land Reg- istry. Lease extensions require the leaseholder to be the registered owner of the flat at the time the lease extension is applied for. Currently, the Land Registry is struggling to cope with demand for registrations, causing delays in processing. During this ‘gap’ period, leaseholders who have purchased a property are unable to exercise their rights under LAFRA immediately. Until they are registered at Land Registry as the registered proprietors, they cannot be considered to be flat owners for the purposes of the legislation. The practical difficulty of delayed registration has a detrimental effect on lease extensions with a lease term approaching the marriage value of 80 years. Previously, the seller had to serve a Section 42 notice on the landlord, and then assign this right to a buyer. With Section 27 of LAFRA, this would become less common as the two-year time frame will be scrapped. However, sellers are still required to be registered at the Land Registry as the le- gal owner to initiate any process. Therefore, due to the practical challenges presented by the gap between completion and registration, buy- ers may require sellers to adopt the previous approach, especially where the lease term has fallen or will fall below 80 years. At that point the buyer is more than likely to pay a higher premium to extend the lease term, especially if he waits for registration of the purchase to complete.
Spring 2025 should see provisions introduced to expand access to the Right to Manage. There will be consultations taking place this summer on service charges and the valuation rates used to calculate lease extension and enfranchise- ment premiums with a view to further reforms being implemented later. In the second half of 2025, we should see a draft Leasehold and Commonhold Reform Bill published, which is expected to include the banning of ground rent and forfeiture, so watch this space!
In Conclusion
The abolition of the two-year ownership rule is an important step towards reforming the lease- hold system. How and when other reforms take effect remains to be seen.
What’s Next?
nisha.patel@haroldbenjamin.com
The Housing Minister, Matthew Pennycook, has stated that work will continue to implement the rest of the measures outlined in LAFRA.
Connect with Nisha
HAROLDBENJAMIN.COM
21
Made with FlippingBook Digital Proposal Creator