Law Commission publishes report on valuation in enfranchisement
8th January, 2020 Today the Law [glossary_exclude]Commission[/glossary_exclude] publishes its report on valuation in enfranchisement. The [glossary_exclude]Commission[/glossary_exclude] sets out options to...
18th March 2021
On 17th March 2021, the Welsh Housing Minister, Julie James MS, published a written statement on the Welsh Government’s research into the sale and use of leasehold in Wales, and the experience of those who live in leasehold properties.
The Housing Minister commissioned the research to improve the Government’s understanding of the operation of leasehold, and to inform their leasehold reform agenda. The research highlighted a number of key findings, including:
- Leasehold properties in Wales represent approximately 16% (approximately 235,000) of all properties.
- Purchasers do not generally make an active choice to purchase a leasehold property, but rather are drawn to them because of location, type of property, and issues such as security.
- Leasehold legislation is complex, and leaseholders often do not fully understand the implications of the law when they buy a leasehold property.
- Even when they do understand the law, it does not necessarily prepare them for the “lived experience” of leasehold.
- Leaseholders participating in this research echoed the disadvantages highlighted by the Law Commission: the lease is a wasting asset and leaseholders do not experience the freedom and control they expect from property ownership.
- The position and experience of leaseholders in Wales is not substantially different from that revealed by investigations into leasehold in England.
The new research complements the other evidence the Welsh Housing Minister has been considering, including the report of the Task and Finish group on leasehold reform, that LEASE supported through membership of the group; the reports of the Law Commission projects on enfranchisement, right to manage, and commonhold; personal and elected member representations via correspondence, Senedd debates and questions; along with other relevant activity including the Competition and Markets Authority’s ongoing investigation into leasehold sales practices.
The Law Commission’s report contains measures to improve the current leasehold system by limiting the restrains on leaseholders to buy or extend their lease. The reports also include recommendations to improve the Commonhold system as an alternative to leasehold ownership. The Welsh Government fully supports the Law Commission’s recommendations; however, it acknowledges that these reforms will require significant primary legislation. This will need full support from the future Senedd following the elections to be held in May 2021.
In addition to setting out the findings of the research, the Housing Minister also set out intentions to reform the leasehold sector, including:
- Restricting future ground rents to zero for leasehold properties in the third phase of Help to Buy-Wales, which is due to commence in April 2021. Through which the Welsh Government aims to eliminate some unfair practices which are experienced in relation to current leases; and a significant drop in the number of new leasehold properties that have ground rents with a financial value. This will apply consistently to new leasehold properties regardless of who builds them;
- Paving the way for a permanent restriction of future ground rents to zero at the earliest legislative opportunity. She has written to the UK Government to request Wales be included in upcoming legislation restricting ground rents in new leases. Recognising that whilst it will be for the next Senedd to consider the merits of the ground rents legislation in respect of Wales, through the legislative consent process, it provides an opportunity to achieve the changes in the shortest possible time for prospective leaseholders in Wales; and
- Seeking the UK Government’s agreement that Welsh and UK officials work together to explore a joint approach to legislation enacting the Law Commission’s recommendations for leasehold reform for England and Wales.
For more information you can read the full report on the Welsh Governments research into the sale and use of leaseholds in Wales here.