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28 Jan 2022

Leasehold enfranchisement: a summary of the latest consultation

Since the publication, in January 2020 and July 2020, of the Law Commission's reports on reform proposals, those of us practising in the field of enfranchisement (and clients of ours minded to make an enfranchisement claim) have been primed for the introduction of reforms of the law relating to leasehold law generally and enfranchisement in particular. Indeed, if some of the measures put forward by the Law Commission were implemented, the landscape would be markedly different to that which we presently face.

By way of reminder, in accordance with the task set for them, the Law Commission’s reports set out a series of options for reform, and for consideration by Government as to which, if any, it wished to pursue. Yet, despite what now seems a flash in the pan in early January 2021, when the Government issued a surprise announcement heralding the possible adoption of some of the Commission’s proposals, we have remained in a position of stasis – even as to the majority of those specific few measures set out in that single announcement last year.

Perhaps there is an unknown policy for the release of surprise law reform announcements on the return to work in the New Year.  On 11 January 2022, without much by way of prior warning, a further update arrived in the shape of the Government’s paper entitled “Reforming the leasehold and commonhold systems in England and Wales”.

This latest publication takes the form of a consultation, inviting views on a set of specific proposals for reform. However, it is notable that this is perhaps the clearest indication yet as to the Government’s intentions. The opening page to the consultation paper, which contains an introduction, states that the Government “agree in principle that these proposals would fulfil our stated aims to broaden access to enfranchisement and the right to manage and reinvigorate commonhold as a future tenure”. This rather has the ring of the Government having already decided to implement these measures unless the responses it receives are radically of the opposite point of view.

The proposals which form the subject matter of the consultation may be summarised as follows:

  1. Raising the non-residential limit (currently 25%) for a building which might qualify for a collective enfranchisement claim to 50%
  2. Raising the non-residential limit (currently 25%) for a building which might qualify for a RTM claim to 50%
  3. Introducing a prescribed non-residential limit (50%) for a building which might qualify for an individual freehold claim.
  4. Introducing a right, which might be exercised by tenants making a collective enfranchisement claim, to compel the landlord to take leasebacks of flats held by those tenants not participating in the collective claim.
  5. Clarifying the operation of voting rights for owners of shared ownership properties in a commonhold development.
  6. Introducing requirements as to the provision of information during the sale of a commonhold property.

There are small flashes of logic amongst these proposals (for example, seeking to ensure that the limit for the non-residential proportion of a building which qualifies for an RTM claim matches that for a building qualifying for a collective enfranchisement claim and, apparently, creating (perhaps a little simplistically) a sense of uniformity in setting a similar ceiling in the context of an individual freehold claim). However, many will know that the suggestions put forward by the Law Commission extend, over hundreds of pages, to several aspects of the law. These need to be resolved and settled as a whole, and the measures which form the subject matter of this latest consultation appear to be an odd collection chosen from the wider debate.

As ever, what will be of prime focus from the list above will be those matters which most affect the reader.

This article is the first in four part series and the next can be found below.

Part Two: Raising the non-residential limit from 25% to 50% for collective enfranchisement claims

In part two, Simon reflects on the government proposal to increase the threshold for tenants of a building divided into flats to be able to collectively claim the freehold of that building from 25% to 50%.

Read More.