06:57, September 20 77 0 theguardian.com

2018-09-20 06:57:07
Leasehold law proposals condemned as 'window dressing'

A proposal to allow homeowners to buy or extend their lease more cheaply has been described as “window dressing” by the National Leasehold Campaign group.

There are 4.2m leasehold properties in England, around half of which are on leases of under 80 years, leaving residents vulnerable to what critics say are rapacious demands from freeholders for lease extensions.

The Law Commission, a statutory independent body that advises on law reform, said its proposals were designed to make the process known as “enfranchisement” easier, cheaper and quicker.

Under its proposals, part of a consultation that closes in November, leaseholders will be given additional rights to buy or extend their lease, removing the requirement that leaseholders must have owned their property for two years before making a claim.

Jo Darbyshire, who launched the National Leasehold Campaign after buying a new home in Bolton from Taylor Wimpey that had a ground rent that doubled every 10 years, said the Law Commission had an impossible task improving terms for leaseholders while ensuring freeholders are compensated.

“It makes my blood boil – what about compensation for leaseholders who were mis-sold their properties? So here we go again, another consultation and probably more window dressing without tackling the leasehold scandal head on,” she said.

“Freeholders have had the time now to organise, mobilise and fund their fight employing PR companies, economists, barristers, etc. And it’s working – the language from government is softening. This will be a long long fight.”

The proposals, which extend to flats and apartments are an extension of the thinking first outlined by the Law Commission in July in regard to leasehold houses. But the commission stepped back from recommending a specific new formula for the price that leaseholders will have to pay to buy out or extend their lease, noting that “sufficient compensation” will have to be paid to the owners of the freeholds.

The briefing paper on leaseholds said: “Options to reduce premiums payable by leaseholders of houses include a simple formula (ground rent multiplier, or percentage of capital value) [with] sufficient compensation to be paid to landlords.”

In July, the Law Commission suggested that the ground rent multiplier could be set at 10 times the existing ground rent, a level that would be welcome by many flat and house owners. But in its latest proposals, the Law Commission underlines what it says is the need for freeholders to be properly compensated.

“The acquisition of a freehold or lease extension will only be permitted if the level of compensation payable to a landlord is sufficient to justify the interference with the landlord’s property rights … the further away from market value the compensation is, the more difficult it may be to justify the interference.”

But the Law Commission said the proposals, now open for consultation until 20 November 2018, would save leaseholders time, stress and money, reducing legal costs and helping to prevent unnecessary disputes.

Law commissioner Prof Nick Hopkins said: “The current system is complex, slow and expensive and it’s failing homeowners. Many feel that they are having to pay twice to own their home.

“Our proposals would make it easier and cheaper to buy the freehold or extend the lease of their home, ensuring the system works for ordinary homeowners across the country.

Changes to the calculation of leasehold extensions have met with fierce resistance from freeholders, with the fortunes of Britain’s wealthiest aristocrats, such as the Duke of Westminster, rooted in lucrative leasehold property estates in central London.

A legal challenge to existing leasehold valuations – which estimated that leaseholders were overpaying by hundreds of millions of pounds every year – was rejected by the court of appeal earlier this year.

Research by the National Association of Estate Agents’ Propertymark arm earlier this month found that a third of leasehold house owners currently trying to sell their homes are struggling to attract a buyer because they don’t own the freehold.

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