This week the Law Commission published a series of proposals designed to transform the leasehold system and make it easier for individuals to own flats and leasehold properties outright, offering hope to people who feel trapped in their homes.
The proposals would make it easier for leaseholders to purchase their freehold, extend their lease for 1,000 years and eliminate their ground rents.
This comes in response to large numbers of homeowners, often living in newly built housing developments, being charged spiralling ground rents and high fees by developers and investment firms, which can also make the homes difficult to sell.
However, Bruce Collinson, a director at Adair Paxton and a specialist in leasehold reform, has sounded a note of caution about whether the proposals could be implemented.
He said: “Although these changes would be a good thing, they are unlikely to work. The Law Commission’s recommendations are driven by the south and London, where the premium for a lease extension is often millions of pounds. In the north, it’s more likely to be between £2,500 to £20,000, so much less onerous.
“You also have to keep in mind that many major freeholders are related to The Queen or pensions, and if their assets are stripped, they would have to be reimbursed. Who is going to compensate them? It would be more realistic to look at simplifying the system for leaseholders, because at the moment it’s wrapped tightly around English and Welsh property law, which is archaic.
“Any owner occupiers now buying a home with a short lease, purely in the hope that these reforms come to fruition, would be taking a big risk. Such drastic changes would take many years to implement and could come to nothing. However, investors and elderly downsizers, who are less reliant on securing a mortgage, are often less worried about lease lengths and it’s likely to be these buyers that show most market interest in response to these proposals.