The All-Party Parliamentary Group recognises the efforts of the Law Commission and welcomes efforts to make leasehold enfranchisement – extending leases and leaseholders’ buying the freehold – easier, simpler and more cost-effective.
While the proposals may be seen as a step in the right direction it still leaves in place many aspects of what is a fundamentally unjust system
The Law Commission proposes to government a number of options for reform, and the APPG naturally favours the options that assist leaseholders, who do not have the resources of commercial residential freeholders to dispute enfranchisement valuations through the courts (occasionally, the highest courts).
As a result, we welcome the Law Commission proposal that leaseholders be allowed to extend their leases on the basis of the valuation of the reversion to the freeholder (the years on the existing lease) and the value of the lease extension.
The APPG welcomes the suggested removal of additional “marriage value”: the supposed extra value obtained, by complex calculations, when the freehold and leasehold are combined in single ownership.
The APPG also applauds the Law Commission for suggesting that the level of ground rent on which the value of “the term” is calculated be capped at 0.1% of the freehold value of the property.
Prescribing the rates that are used to calculate the value of the term, reversion or marriage value – if this is persisted with – would also be beneficial for leaseholders and avoid the expense of legal process.
The APPG’s paramount concern is fairness in what is at present an unbalanced process, where well resourced freehold owners game the system to their advantage.
This emphasises that leasehold owners are merely tenants, rather than real home owners.
At a time when thousands of leaseholders are caught up in the cladding scandal, and face zero valuations of their homes, this is not positive.