Those who have been watching this space closely will know that there has been a lot of anticipation and questioning about when the next phase of the Government’s stated objectives to make it ‘cheaper and easier’ for leaseholders to buy their freeholds will come into force. Predicting the future is of course something of an imprecise art.
However, in this letter to Mark Chick, Our Senior Partner in his capacity as chairman of ALEP, Lord Greenhalgh does set out some indications that the Government will look to bring forward legislation in the second and final session of this parliament to address two points promised earlier – the 990 year lease extension and also the prospect of the reform of the law in relation to valuation.
More detail appears in the article below, but in summary perhaps two main themes can be taken away from this news. Firstly, amending the legislation to allow lease extensions under the statute to be for 990 years rather than the plus 90 years that they are at the moment is probably something that can be achieved quite easily.
However, as to the second ‘promise’ to reform the law in relation to valuation, this is likely to be much more contentious and may well be the subject of a challenge under the Human Rights legislation. As to how this might come in is not entirely clear and those that have followed the debates that have flowed form the Law Commission’s original work on this will know that the prospect of valuation reform is not perhaps as straightforward as one might think. We may therefore see some delay and one also has to factor in the possibility that the second and final term of this Parliament may well have certain other urgent business. On that basis, those with a lease likely to fall under 80 years in the short to medium term future would be well advised to consider their options very carefully to avoid the risk that these promised changes may not come in, and/ or may not come in as first envisaged. Of course, every case is different, but one thing that is clear is that expert assistance may well be needed to decide what is right in any particular case.
For more information see the note below:
Leasehold Changes – an update following the Letter from Lord Greenhalgh to ALEP dated 13th June 2022.
We have been wondering when the next phase of leasehold reform will be coming ….
Well now we have some news.
In a carefully worded letter from the Minister Lord Greenhalgh addressed to me in my ALEP capacity, he states that Government intends to press ahead with the plans previously announced to ban marriage value and to ‘simplify’ the basis of the valuation calculations (including the introduction of an online calculator) in the next session of this Parliament.
I take this to mean that legislation will be tabled to do this in the next and final session of this Parliament in the run up to the next (scheduled) election in May 2024.
These proposals also include the previously stated promise to increase the length of a statutory lease extension to 990 years. Of these proposals the scope for valuation reform is going to be contentious, proposing as it does a shift of values from freeholders to leaseholders. The letter anticipates the prospect of a Human Rights Act challenge, and I wouldn’t be the first commentator to suggest that this might well be the case, given that the options given by government to the Law Commission on this topic were the most political terms of reference they had ever received.
But there we have it, a timetable at last as to when the proposals first announced on 7th January 2021 are to be the subject of some draft legislation.
Given everything else that is going on in the world at the moment, it might be hard to say with certainty that these will become law then (or under any future Government), but we do have the political will to effect these changes.
27th June 2022