Leasehold Solutions, the market leader in project managing lease extensions and freehold acquisitions, has raised concerns about the Law Commission’s proposals to reform the leasehold system and claims the solutions amount to little more than “window dressing”.
On 18 July, the Law Commission announced several recommendations to help the owners of leasehold houses, including: simplifying the enfranchisement regime; giving leasehold house owners the right to purchase longer extensions to their lease without a ground rent; and enabling the owners of leasehold houses on estates with shared services to pursue collective enfranchisement.
Prominent leasehold reform campaigner Louie Burns, Managing Director of Leasehold Solutions, said: “Whilst we welcome any changes that will make leasehold fairer for leaseholders, we were surprised by the optimism with which much of the media has greeted the Law Commission’s proposed ‘solutions’. Having reviewed the summary document in detail we see things rather differently.
“Our main concern is that the document gives far too much weight to freeholders’ legal rights by promising to ‘keep in mind the interests of landlords who would be affected by reforms which lower the premium’ paid by leaseholders. The proposals are contradictory as any reform will create winners and losers but the Law Commission proposal suggests that compensation will still be in the landlords’ favour.
“By committing to ensure that ‘sufficient compensation’ is paid to landlords, the Law Commission has been unable to propose the radical reforms needed to make leasehold enfranchisement significantly cheaper and easier for leaseholders.
“The Government promised in December 2017 to make sweeping changes to the leasehold system in order to make the process simpler, quicker and cheaper for leaseholders, but these proposals amount to little more than window dressing.
“Some of the proposals are very vague, such as the promise to ‘remove technical barriers and complexities’, while we believe that other recommendations will simply be unworkable in practice, including several of the options outlined to improve valuation methods.
“It is also disappointing that the Law Commission is proposing to tinker with existing legislation when radical reform is needed. Leasehold Solutions has been campaigning for leaseholders’ rights for the past 16 years, and whenever reforms are made in a piecemeal fashion, the result is that multi-millionaire freeholders and their cunning lawyers challenge reform at every stage, and thwart attempts to improve the system for leaseholders.
“Tinkering around the edges will just allow this cycle to repeat itself, wasting millions of pounds of leaseholders’ money in lengthy legal battles.”
The Law Commission will launch a detailed consultation on a new enfranchisement regime in respect of leasehold houses and flats in September, before publishing its final report in 2019.
Louie Burns concluded: “It is absolutely vital that leaseholders respond to the upcoming consultation this September, in order to make their voices heard loudly and clearly, and to encourage the Law Commission to recommend the bold reforms that are necessary to end abuse in the leasehold system.”