Skip to main content

Most popular advice guides

Service charges and other issues

Service charges, administration charges, ground rent, recognised tenants associations and forfeiture. For a brief summary...

Leasehold Extension – Getting Started

The right to extend the lease of a flat under the Leasehold Reform Housing and...

Living in Leasehold Flats – A guide to how it works

The nature and typical rights and obligations that relate to the ownership of a leasehold...

Section 20 Consultation for Private Landlords, Resident Management Companies and their Agents

Consultation for qualifying works to a building and qualifying long-term agreements. Purpose of this booklet...

Leasehold Houses – Buying the freehold – Qualification and procedure

Qualification requirements for a tenant to buy the freehold of their leasehold house and outline...

Right to Manage

The right for leaseholders of a building containing flats to take over the management of...

Law Commission publishes report on valuation in enfranchisement

8th January, 2020

Today the Law Commission publishes its report on valuation in enfranchisement. The Commission sets out options to reduce the cost that leaseholders have to pay to buy the freehold or extend the lease of their homes, and follows its September 2018 consultation paper – ‘Leasehold home ownership: buying your freehold or extending your lease’.

The report proposes three principal options and seven ‘sub-options’ (see flowchart below)

sitemap chart

 

Professor Nicholas Hopkins, Property Law Commissioner said:

“We were asked to provide options for reform that save leaseholders money when buying their freehold or extending their lease, while ensuring that sufficient compensation is paid to landlords. This is what we’ve done.

“We are ready to help the Government in implementing whichever options for reform they choose.”

Housing Secretary Rt Hon Robert Jenrick MP said:

“I welcome these proposals from the Law Commission which provide options to make it simpler and faster for leaseholders to buy their freehold or extend their lease.

“I will consider the proposals outlined in this report carefully and set out our preferred way forward in due course.

“We have already committed to addressing the abuses of leasehold seen in recent years, by reducing ground rents to a peppercorn level and limiting new leasehold to apartments, save in the most exceptional circumstances. The Competition and Markets Authority is examining the alleged misselling of leasehold properties and I will also await their findings with interest.”

LEASE’s Interim Chair, Wanda Goldwag said:

“We welcome the Law Commission’s report, and we are pleased to see the Law Commission noting our response to their September 2018 consultation. We look forward to continuing to support the reform agenda in the months ahead.”

Glossary:

Marriage value is the difference between:

  1.  The value of the freehold in single ownership, and
  2. The value of both (a) the freehold interest and (b) the leasehold interest in separate ownership.

The value of (1) is often more than (2). Marriage value is “realised” or “released” by an enfranchisement claim because the freehold and leasehold interests, previously in separate ownership, are now in single ownership. [Where the lease has 80 years or less to run, the leaseholder must pay half of the marriage value to the landlord.]

The Law Commission’s other leasehold projects are due to be published in the Spring 2020:

  1. Final recommendations for reforming non-valuation aspects of the enfranchisement regime and aims to release a report on those issues in Spring.
  2. Making it easier for those who wish to exercise their Right to Manage to take direct control of their block; and
  3. To rethink how we own property in England and Wales and, through Commonhold, offer homeowners an alternative system to leasehold

 

LEASE’s enfranchisement valuation information:

 

Ministry of Housing, Communities and Local Government logo

LEASE is governed by a board, appointed as individuals by the Secretary of State for the Ministry of Housing, Communities & Local Government.

[name="email"]
[name="email"]