Homeowners would be able to buy their freehold at a fraction of the current price under radical reforms proposed by the Law Commission.
Homeowners who purchase their property on a leasehold basis find the value plummets once there is less than 80 years left on the lease and are then placed in a vulnerable position as they negotiate an extension from the freeholder. There are more than four million leasehold properties in England.
Currently, enfranchisement rights give leaseholders the right to purchase the freehold or extend the lease. However, this process is costly, complicated and tends to favour experienced landlords over leaseholders.
However, the Law Commission, the independent body which advises government, has now set out its options for reform.
These include changing the formula for valuing the lease to make it cheaper, for example, a formula where leaseholders pay ten times their ground rent to purchase the freehold.
The Commission also suggests making the freehold purchase process easier, removing the rule that leaseholder must own their home for two years before making a claim, and scrapping the requirement that leaseholders pay the freeholder’s legal costs.
Law Commissioner Professor Nick Hopkins said: ‘Enfranchisement offers a route out of leasehold but the law is failing homeowners: it’s complex and expensive, and leads to unnecessary conflict, costs and delay.
‘We’ve heard of untold stress caused to homeowners who have had to put their lives on hold because of issues with their leases. Clearly, that’s not right, and our solutions for leasehold houses will provide a better deal for leaseholders and make sure that the law works in the best interests of house owners.’
