On 18th March the House of Commons Committee on Leasehold Reform published its report following on from fairly extensive evidence heard orally from various sources.
The report draws together various themes concerning long leasehold and touches on a number of the issues raised as a result of the so-called ‘leasehold scandal.’
Although this document is entirely separate from the Law Commission’s current consultations on Enfranchisement, Commonhold and the Right to Manage, it does show the willingness of government to look at these points together which is encouraging.
There is also reference to the MHCLG’s call for evidence on ground rents from last year and a sensible discussion about the fact that if ground rents are not to be banned entirely that these should he say, capped at £250 p.a. Or, as I have suggested previously, perhaps at a fraction of the open market value of the property – 0.1% of the capital value on the basis that this appears to be the lenders’ consensus view on what constitutes an ‘onerous’ ground rent.
Further details of the Committee’s report can be found at: https://www.parliament.uk/business/committees/committees-a-z/commons-select/housing-communities-and-local-government-committee/inquiries/parliament-2017/leasehold-reform
Comment
In my view, clarity around the sales of new build leasehold properties would be very welcome and the issues that have arisen from the sale of houses as leasehold have caused significant and well-reported issues.
Clearly, having access to independent and accurate advice is key when dealing with leasehold properties and it does appear that in these cases, there has been an ‘advice failure’ in some parts of the country. This has been compounded by developers ‘instating’ on panel conveyancers who unfortunately did not understand leasehold.
Property is a significant, illiquid and long-term investment. The advice provided around its purchase needs to reflect that.
Some may also say that the report itself is well voiced on the part of those campaigning for change, but that the range of views could perhaps have been wider. There is a view expressed by some that a long lease with a modest ground rent is acceptable and certainly not unsaleable – provided that appropriate advice is obtained. That view does not come over in the report.
However, the report does show that government wants to look seriously and much more widely at the whole of leasehold, which is very welcome.
Mark Chick