Taking to X on January 31, Matthew Pennycook, MP for Greenwich and Woolwich and Minister of State for Housing and Planning, explained his thoughts on the Commonhold and Leasehold Reform Bill.
Here’s what he had to say…
In the wake of the publication of our draft Commonhold and Leasehold Reform Bill on Tuesday, lots of existing leaseholders have been in touch seeking clarity as to when the government plans to make it cheaper and easier to extend a lease or buy a freehold.
Among the provisions of the Leasehold and Freehold Reform Act 2024 which was passed in the dying days of the last Parliament is a new method for calculating the price of a statutory lease extension or freehold acquisition, known as the valuation process.
The Act’s revised valuation process will remove the requirement for marriage value to be paid; cap the treatment of ground rents in the valuation calculation at 0.1% of the freehold value; and allow government to prescribe the rates used to calculate the enfranchisement premium.
Following a robust defence from the government, in October last year the High Court comprehensively dismissed challenges brought to the 2024 Act by a group of claimants who were owners of freehold and other reversionary interests of dwellings.
“A consultation to establish what valuation rates.”
As such, we are now preparing a consultation to establish what valuation rates should be used to calculate the enfranchisement premium. We will launch that consultation in the coming months. The rates will ultimately be set by the Secretary of State in secondary legislation.
Sadly, even with the valuation rates established, we will not be able to commence the relevant enfranchisement provisions in the 2024 Act until we have rectified a small number of specific flaws that were contained in it.
These include a loophole which means that the 2024 Act goes far beyond the intended reforms to valuation and that undermines the integrity of the amended scheme.
“Balancing speed with care as we enact reforms.”
That the previous government passed the 2024 Act knowing these flaws existed is deeply regrettable. It is also why this government is balancing speed with care as we enact reforms and why we’ve asked the Select Committee to subject our Bill to enhanced pre-legislative scrutiny.
The specific flaws in the 2024 Act must be fixed through primary legislation. For obvious reasons, my firm preference is to rectify them in the final Commonhold and Leasehold Reform Bill.
Once the valuation rates have been set and the flaws in question have been fixed, we will commence the 2024 Act’s enfranchisement provisions.
While it is important that we take the time to ensure that reforms are watertight, I appreciate fully the need to act as quickly as we can to provide relief for leaseholders across the country, particularly those with leases approaching 80 years.
