Parliamentary reforms to the leasehold legislation has been in the works for some time, since the government first announced on 21 December 2017 their intention to address many of the perceived imbalances within the law, in particular the balance of power between Landlords and their Tenants of long leases. The following government article details the history of the initiative.
We have already seen the one such reform being brought into force (see our Ground Rent Act 2022 article), but what is on the horizon?
There have been certain commitments made by the government, however there is much speculation as to how much of it will be brought into force and there are a number of proposals that are considered quite controversial.
Please see our column on “Leasehold Reform” where we provide our take on each of the proposals.
One of the most notable is the abolition of “marriage value”. This represents an formulaic element within the prescribed method of calculation for both Lease Extension and Enfranchisement Premiums (see our guidance pages for an explanation of what these are). In essence, the factor is applicable when calculating the value or of the Landlord’s asset whenever carrying out either of these acquisition claims, and it applies an additional sum payable in respect of any lease that has fewer than 80 years remaining.
Marriage value can represent a significant sum of money, especially in the situation of a Freehold acquisition in which the leasehold flats within have very short leases.
Other significant changes:
For lease extensions:
For Right to Manage and Enfranchisement:
Reintroduction of Commonhold
It will be interesting to see on how such measures shall be brought into force, if at all.