Radical reforms allowing flats to be sold with freehold title (as part of a commonhold) have been proposed today by the Law Commission.
A raft of changes have been suggested after a two-year probe into leaseholds. The investigation followed furore around the sale of houses on estates with leaseholds which had ground rents that were due to double every 10 years.
Thousands of families say they are stuck in homes that are virtually impossible to sell due to the leaseholds.
The Law Commission proposals, if made law, would make it easier for leaseholders to buy their freehold, extend their lease or eliminate ground rents.
One proposal would give homeowners the right to extend their lease for nearly 1,000 years while at the same time removing any obligation to pay rent to the freeholder.
The proposals come in response to a scandal that has seen thousands of homeowners facing inflating ground rents and fees by developers and investment firms.
Rules to ban the sale of houses with leaseholds and also outlaw developers from selling leases containing obligations to pay for ground rent were announced last year But they have yet to be brought into effect and they didn’t affect those homeowners who already had houses with leaseholds.
The Law Commission’s proposals go further by suggesting that existing leaseholders should have the right to a lease extension for a term of 990 years. Currently, the law only
allows extensions are only available for 90 or 50 year.
It recommended there should be no ongoing ground rent under this extended lease, and landlords should not be able to use the lease extension process to impose new obligations.
This would put an end to the onerous ground rents that many leaseholders have to pay while at the same time making it much easier for homeowners to sell these properties.
The Law Commission also recommended a new right for leaseholders with very long leases to & 'buy out' the ground rent under their lease without also having to extend the
length of their lease.
Professor Nick Hopkins, commissioner for property law, said: “The leasehold system is not working for millions of homeowners in England and Wales. We have heard how the current law leaves them feeling like they don't truly own their home.
“Our reforms will make a real difference by giving leaseholders greater control over their homes, offering a cheaper and easier route out of leasehold, and establishing commonhold as the preferred alternative system.”
