On the 27th January the Government published the long-awaited draft Commonhold and Leasehold Reform Bill and launched a consultation on reinvigorating commonhold as the default form of property ownership in England and Wales.
The proposals signal a clear intention to reshape the leasehold system. Measures include capping residential ground rents at £250 per year, with an intention for ground rents to fall to a peppercorn over time, banning leasehold as a form of tenure for most new flats going forward, and removing a landlord’s ability to forfeit residential leases.
If implemented, these reforms would represent one of the most significant changes to residential property law in decades. They will have far-reaching implications for leaseholders, freeholders, developers and lenders, particularly in relation to valuation, enforcement rights and long-term asset management.
At this stage, the detail of the draft Bill will need to be studied carefully. However, the direction of travel is clear: the Government is seeking to fundamentally change the way residential property is owned and managed in England and Wales. Reforms of this scale will need to be workable and balanced if they are to achieve their intended outcomes.
The draft Bill will now be subject to pre-legislative parliamentary scrutiny before progressing through the legislative process in both the House of Commons and the House of Lords.
John Midgley, Seddons GSC Head of Leasehold Enfranchisement, said:
‘Given the amount of scrutiny this draft Bill will face, these proposals are unlikely to take effect in the immediate future, and further amendments should be expected. We will continue to monitor developments closely and provide further commentary as the Bill progresses.’
In the meantime, leaseholders and property owners considering enfranchisement or other leasehold-related claims should seek specialist advice based on their individual circumstances.
If you want specific advice on whether to proceed with enfranchisement related claims at this stage, please contact John at [email protected]