The Government has launched two consultations that will shape how much leaseholders pay to extend their leases or buy their freeholds under the Leasehold and Freehold Reform Act 2024, prompting calls from industry specialists to ensure the reforms are practical as well as affordable.
The Ministry of Housing, Communities and Local Government has begun consulting on two of the most significant outstanding elements of the Act: the valuation rates used to calculate enfranchisement premiums and the new rules governing who pays legal and valuation costs during the enfranchisement process.
Both consultations run until 23 September and will inform the secondary legislation needed to implement the reforms.
Under the proposals, the Government will set standard valuation rates used to calculate the price leaseholders pay to extend their lease or purchase their freehold. A separate consultation seeks views on implementing new rules that will generally require each party to meet its own legal and valuation costs, while defining the limited circumstances in which leaseholders may still contribute towards landlords’ costs.
LEASHOLD REFORM
The changes form part of the wider programme of leasehold reform intended to make enfranchisement simpler, quicker and less expensive for leaseholders.
Mark Chick (main picture, inset), Director of the Association of Leasehold Enfranchisement Practitioners (ALEP) and Senior Partner at Bishop & Sewell LLP, says: “We welcome the publication of these consultations, which provide some much-needed clarity on how the enfranchisement provisions within the Leasehold and Freehold Reform Act 2024 may operate in practice. However, the valuation rates and treatment of process costs are not minor technical details.
“They will determine what leaseholders pay, what freeholders receive and whether the new system delivers a fair and workable outcome for everyone involved.
“The Government is right to seek views from leaseholders, freeholders and other affected parties.
“However, these are highly complex proposals, and specialist enfranchisement professionals will play an essential role in helping people understand their implications and identify consequences that may not be immediately apparent.”
“The Government must take the time to get these provisions right.”
He adds “ALEP supports meaningful leasehold reform and recognises that commonhold will play an important part in the future of property ownership. Our concern has always been to ensure that reform works in practice.
“Changes designed to reduce costs for one party must not simply transfer those costs elsewhere or create new barriers, disputes and delays.
“We will examine both consultations carefully and provide detailed evidence. The Government must take the time to get these provisions right, rather than allowing the pressure to implement legislation quickly to outweigh the need for a balanced, legally robust and practical system.”
