The Law Commission has launched its highly anticipated consultation into the leasehold enfranchisement of houses and flats with the stated aim of addressing the perceived inadequacies in the current system. The initial consultation criticised the enfranchisement process as being unfair, complex and expensive. Whilst there is no doubt that clarity would be welcomed in certain aspects of the enfranchisement process, there is a risk that over-simplification could create a rigid system resulting in unintended consequences.
The most contentious aspect of the consultation is the proposal to reform the valuation procedure. The specific policy objectives identified by Government were to provide a better deal for leaseholders as consumers. The Law Commission plainly states that any proposed reforms will benefit leaseholders at the expense of landlords by reducing the amounts payable. This could have a significant impact on the value of landlords’ property interests. It has to be understood that enfranchisement is a form of compulsory purchase where landlords are forced to dispose of their interests often against their will. As a result, the impact of the valuation reforms will be carefully assessed against Human Rights legislation.
The consultation closes on 20 November 2018 following which the Law Commission will make firm proposals to the Government. Those proposals can be expected in the Spring of 2019 at which point the government is likely to be occupied with other pressing matters! On the other hand, with an estimated 4-6 million leaseholders in the country the Government will no doubt be keen to capitalise on reforms which could potentially receive high levels of support.