Prohibition of all leasehold sales among the reforms proposed by the Law Commission

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Proposals to ban builders from selling homes on lease and overhaul the way landlords buy or extend their leases have been brought forward by the Law Commission.

In its latest round of reports, which were the subject of a two-year leasehold study, the Law Commission wants the government to make common tenure agreements mandatory, ending the use of contracts. lease and protecting landlords from profit. developers.

Replacement of the lease

The commission also suggested encouraging developers to use common property rather than leasehold ownership, or making it unattractive to sell properties on lease terms.

The government has previously said it wants to make common property a viable alternative to leasehold ownership, but the Law Commission has said without strict intervention developers will not move to lesser-known tenure.

One way to do this is to leave them no choice, the commission said.

“Commonhold is used all over the world; it can and does work, ”the legal advisers reported. “But as long as there is more money to be made from the lease, and unless an initial impetus can be given to overcome the inherent inertia and lack of awareness, it is not going to take root. of itself.

“Without government intervention, common ownership simply cannot compete with leasehold ownership.”

Commonhold is an alternative to the lease. It was introduced in England and Wales in 2002 to allow freehold ownership of apartments.

It allows apartment owners to become full owners of their home forever and no ground rent is payable.

They can also directly influence the management of their own building. And unlike lease contracts, there is no developer or landowner to profit from the sale of the contracts.

But tenure has not been popular, and since the legislation was introduced, only 20 common property agreements have been put in place.

The commission says this is partly because it’s a less attractive way to sell a home for developers, but also because breaches in current law have prevented its use. The commission proposed reforming the system to make it a viable alternative.

“Once we have common property in a way that works… we no longer need long residential leases,” said Professor Nick Hopkins, Legal Commissioner.

Purchase or extension of existing leases

The commission also wants to revise the current system allowing landlords to buy freehold property, or extend the term of their lease, called emancipation.

Among its recommendations, the commission wants to reduce the cost of buying full ownership, give owners of houses and apartments the same rights, the possibility of extending a lease of 990 years instead of 90 or 50 years and the prohibition of charging ground rent during the extended term of the lease.

The changes will give tenants better control over the costs they pay during the process and they would not be responsible for paying any fees incurred by the landlord.

Mark Hayward, Managing Director of NAEA Propertymark, said: “We have long called for action to be taken to help tenants who have been misled and treated unfairly, so it is really positive to see the Legal Committee report today. ‘hui.

“For too long, home builders and developers have not been transparent enough about what it really means to buy a leasehold property, which has led many homeowners to face rising land rents. and at unreasonable costs, which led them to financial hardship.

“In 2017, we pleaded for a reform of the lease through our ‘Leasehold: A Life Sentence?’ report which found that 93 percent of respondents would not buy another leasehold property.

“It is essential that the proposals presented in today’s report lead to action as soon as possible to give some hope to those currently trapped in leasehold properties with no easy way out.”



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