New Leasehold Legislation

[Sherry7]

Just heard about this and wonder if anyone knows if and when it will come into effect? I have also heard it could take years to be finalised. Thank you.

[AndrewDod]

What legislation is this.

You mean new legislation to to allow lessees to enforce existing legislation and leases?

Like FH not stealing, charging only according to the lease, not taking backhanders, providing documents the law already says must be provided, like maintaining the property according to the leases and not making extra money out of that whether directly or indirectly.... and so on. And legislation that imposes on the court system the obligation to obey the law (and even to exist as a functioning entity that can be accessed)?

Or is it some irrelevant guff about doubling ground rents or other such diversionary tosh?

[Gordon999]

On 11 January 2021, Robert Jenrick, the Secretary of State said leasehold reform would be tackled through two pieces of legislation.

A Bill in the forthcoming session will “set future ground rents to zero”. This will also apply to retirement properties, but commencement in respect of retirement properties will be delayed for a period.

Future legislation will:

• Reform the process of enfranchisement valuation used to calculate the cost of extending a lease or buying the freehold.
• Abolish marriage value.
• Cap the treatment of ground rents at 0.1% of the freehold value and prescribe rates for the calculations at market value. An online calculator will simplify and standardise the process of enfranchisement.
• Keep existing discounts for improvements made by leaseholders and security of tenure.
• Introduce a separate valuation method for low-value properties.
• Give leaseholders of flats and houses the same right to extend their lease agreements “as often as they wish, at zero ground rent, for a term of 990 years”.
• Allow for redevelopment breaks during the last 12 months of the original lease, or the last five years of each period of 90 years of the extension to continue, “subject to existing safeguards and compensation”.
• Enable leaseholders, where they already have a long lease, to buy out the ground rent without having to extend the lease term.

Responses to the Law Commission’s remaining recommendations on enfranchisement, commonhold and right to manage will be issued “in due course” and translated into law “as soon as possible”.

On the timing of future legislation, Lord Greenhalgh, the Minister responsible for leasehold, responded to questions on 5 January 2021 and said:

We need primary legislation. I have been told by Professor Hopkins, who was in charge of the Law Commission work, that the preparations to get primary legislation ready for consideration by noble Lords will take approximately one year, so we are probably talking about the third Session.

https://commonslibrary.parliament.uk...and-and-wales/

published wednesday 20 Jan 2021.

[Macromia]

Personally, I wouldn't hold my breath waiting for any sort of leasehold reform that will genuinely benefit leaseholders - especially with a Tory government with a large majority in power.
There is some possibility of the devolved governments of Scotland, Wales and Northern Ireland introducing beneficial legislation at some point in the future, but I don't expect even that to happen any time soon.

I doubt that Westminster will do anything more than potentially address a few perceived issues for new leaseholds at present. Removing the value from leaseholds would give the freeholders reasonable grounds to demand some sort of compensation from the government (which the government currently can't afford to pay) and might upset potential Tory donors.

[AndrewDod]

Yes. Although many of the very worst freeholders are either a) City Councils or b) fellow majority lessees in RTMs/RMCs neither of whom are necessarily Eton Tory Voters. I'd suspect that those most badly affected by the dismal failure of current leasehold law are in a majority Tory Voters as well -- so I'm not that sure about the political-sides argument. I don't see meaningful reform featuring on the manifestos of any other parties either.

[Macromia]

I agree - although I think that councils and "fellow majority lessees in RTMs/RMCs" are more likely to be poor freeholders purely because they can't be held to account as easily as independent private freeholders (not that the latter is always easy!).

This is one of the worrying thinks about supposed 'forthcoming' leasehold reform - there is a misplaced idea that leaseholders are better off if they all have an equal share of a freehold.

[AndrewDod]

^^^ Well I couldn't agree more. With both paragraphs. The problem in a nutshell.