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Leasehold System Needs Reform

The Housing, Communities and Local Government Committee (HCLG) has released its leasehold report, concluding that the home leasehold system needs reform. Householders have been left with unsellable and unmortgageable homes and changes are needed, the committee concluded.

Government figures suggest there were 4.2 million leasehold properties in England in 2015-16, with many householders not aware of the difference between leasehold and freehold.

Leaseholders in new-build properties are being treated as a source of profit, and the current system is unfairly weighted against them, according to the HCLG, which also identified a number of issues requiring reform.

Its report identifies a number of issues that need reform, including:

●      ground rents

●      service charges and one-off bills

●      permission charges

●      dispute mechanisms

●      advisory services

●      costs to extend leases.

The committee also concluded that the balance of power in leases, legislation and public policy was weighted too heavily against leaseholders, receiving 'considerable' evidence of developers 'incentivising and insisting' on specific solicitors being used.

The Law Society of England and Wales commented that “the unforeseen charges faced by some purchasers of leasehold properties could be addressed if developers and estate agents complied with consumer protection regulations by giving information up front.

“We have been clear there are significant issues with leasehold law as it now stands. We have consistently called out some of the questionable practices that have arisen around the management of leaseholds and made the case for subsequent reform to ensure home owners get a fair deal.

“One solution could be to improve commonhold legislation as another option. The Law Commission is currently consulting on a set of proposed changes to make the current system more attractive and workable - a move we have supported and will be contributing towards making a success.”

Posted on 28 March, 2019 by Ortolan

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