27/07/2020

Law Commission’s blueprint for future of home ownership welcomed

NICK OHARA LARGE

Recommendations for a new and clear direction for the future of home ownership have been welcomed by Thursfields Solicitors.

Nick O’Hara, managing director at Thursfields was commenting after the Law Commission unveiled a plan that included a commonhold regime described as “fit for purpose”, plus a reform of leasehold enfranchisement and the right to manage.

Nick said: “Put simply, the leasehold system is just not working properly for millions of homeowners in England and Wales, leaving them feeling as if they don’t really own their own home.

“We believe the Law Commission’s blueprint will transform the sector, with leaseholders having the right level of control over their homes, a more affordable and clearer option to leave leasehold, with commonhold as the accepted new system.

“We agree with the Law Commission’s call on government to look at all areas – unfair leaseholds, enfranchisement, commonhold and the right to manage – together when considering legislation on the changes proposed.”

Residential leasehold had been one of the 14 topics the Law Commission had been exploring since December 2017.

Commonhold means that a person can own a freehold flat, but although it was launched in 2002 it never caught on because of market inertia, an existing leasehold system used by developers for ongoing income streams, and technical difficulties.

The Law Commission has recommended the removal of a requirement for leaseholders and interested parties to unanimously agree to convert to commonhold, and has said that the rulebook, known as the “commonhold community statement”, should be reformed.

This commonhold regime would be new to practitioners, but the Law Commission has argued it will be “more rational” than the complex existing system of leasehold and will be more efficient to operate than leasehold law.

Another recommendation from the Law Commission is for the reform of leasehold enfranchisement that would give leaseholders of houses and flats the right to a lease extension for a 990-year term, replacing the shorter extensions of 90 or 50 years under current law.

Nick said: “For too long the whole process of enfranchisement has been too uncertain, too cumbersome and far too expensive and it is hoped that these reforms may address this.”

The Law Commission has also recommended the removal of the requirement for leaseholders to pay the landlord’s costs in right-to-manage claims, which entitle leaseholders to take over the management of their building without buying the freehold.

The Law Commission also wants various complex procedures for making enfranchisement claims to be replaced with a “single, efficient procedure”.

It also wants the claims to be made easier by reducing the number of notices that a leaseholder must serve, allowing any tribunal to waive minor procedural errors.

Nick added: “We welcome the Law Commission’s recommendations and agree that if adopted it should result in what it describes as a ‘fit for purpose’ commonhold regime.”

Luke Hall, the housing minister, said the government will “carefully consider” the recommendations, and leasehold reform is expected to feature in the government’s long-awaited proposals to cut planning red tape.

NICK OHARA LARGE

Nicholas O’Hara,

Managing Director, Board Member

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