The report puts forward three alternatives for determining the premium. They would make enfranchisement less expensive for leaseholders, and ensure sufficient compensation is paid to landlords to reflect their legitimate property interests.
Each scheme uses a different basis to determine the price of enfranchisement and allows for further reforms to make the process simpler and more certain.
Further reforms possible
Alongside the three schemes, The Law Commission put forward a range of further options for reform. These include:
- Prescribing the rates used in calculating the price, to remove a key source of disputes, and make the process simpler, more certain and predictable.
- Helping leaseholders with onerous ground rents, by capping the level of ground rent used to calculate the premium.
- The creation of an online calculator for determining the premium to make it easier to find out the cost of enfranchisement, and reduce uncertainty around the process.
- Enabling leaseholders who are collectively enfranchising a block of flats to avoid paying “development value” to the landlord unless and until they actually undertake further development.
As well as reducing the price, the Law Commission hopes that these options could clarify and simplify the law, making the process of leasehold enfranchisement easier and less expensive to operate.
It’s encouraging to see that steps are being taken towards resolving the inherent issues of leasehold which is something we argued for through our 2017 Leasehold: A Life Sentence? report which found that 93 per cent of respondents wouldn’t purchase another leasehold property.
While we still need a robust solution for all of those affected by the issue, this a positive step in making it easier for leaseholders to buy their freehold or extend their lease and we encourage further reform to tackle this problem.
