Leasehold reform government announcement

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    Originally posted by flyingfreehold View Post
    I suspect it will be a simple arithmetic formula to buy out ground rents, unfortunately not one than fairly values the landlord's end of the equation, but for the proceeds to be tax free as with compulsory purchase
    The Insurance industry have been acquiring large swaths of ground rents and the valuation of the indexed income will need to be done in a proper way otherwise its off to the ECHR. The insurance industry due to quantitative easing found it increasingly expensive to buy indexed linked gilts and saw indexed linked ground rents as an alternative. The idea it is simply X times the income will not be a sufficiently accurate way to value the income

    I think rather than climb down over marriage value I can see the deferment rate being lowered to 3.75% to 4% for reasons I have given above , this may be acceptable to the Great Estates in London who have very substantial sums tied up in such investments

    Marriage value in a highly efficient market would not exist. It is the by product of any inefficient market and the more correct we are in the valuation of the reversion and the income the less marriage value that is created.

    You point about the proceeds being tax free only applies if you roll over teh gain into another qualifying asset


      We did ask the Revenue a good few years ago if the gain could be rolled over by reinvestment into land elsewhere in the EU and the slightly surprising answer came back that the reinvestment could be anywhere in the world, provided freehold or leasehold (or equivalent) with more than 60 years unexpired.

      I don't see how the Government can properly legislate as to what should be the cap rate; they never have done, its always been a matter for Tribunals. They could reasonably limit recoverable costs to a maximum of say £1200


        The roll over exemption is something I am familiar with and was surprised about the 60 year rule - were you directed to any statement of practice on this by the Revenue

        I do think the government could deliver on its promise to make it easier quicker and cheaper if the landlords costs were capped. I do think that if the landlord acquired his interest post 1993 then he knew there was a chance of enfranchisement and therefore should bear his costs. Pre 1993 perhaps the lessee should contribute with possibly a cap
        Another area where it could make it easier for lessees and yet not upset landlords would be that in an enfranchisement claim the landlord could elect or the lessees insist he takes an overriding lease over the non-participators. Many landlords wish to retain their investment in the non-participators but of course at present they have no right.


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