A year ago, the government announced its imminent plans to reform the future of homeownership in England and Wales which had been noted as the ‘biggest reform to property law in a generation’. In recent months we have seen some small developments with The Leasehold Reform (Ground Rent) Bill and yesterday evening the Government announced a consultation on its latest and wide-ranging proposals to reform the leasehold and commonhold systems.
The newly published consultation states that the UK and Welsh governments have considered the Law Commission recommendations, made in July 2020 and agree in principle that these proposals would fulfil the aim to broaden access to enfranchisement and the right to manage and reinvigorate commonhold as a future tenure.
The consultation however invites homeowners and the real estate industry to share their views on the impact of the proposal over the next six weeks, with responses requested by 22 February 2022, before final decisions are made.
The invitation specifically seeks views on…
- The non-residential limit for collective enfranchisement;
- The non-residential limit for right to manage claims;
- A non-residential limit for individual freehold acquisitions;
- The introduction of mandatory leasebacks as part of collective freehold acquisitions;
- Commonhold voting rights in shared ownership properties; and
- The provision of information during the sale of a commonhold property.
What are the proposed changes?
Under the proposal, the government aims to broaden access to enfranchisement (the purchase of the freehold) and the ‘right to manage’, allowing leaseholders to take control over the running of their buildings. It highlights the increase in the ‘non-residential limit’ from 25% to 50%, allowing leaseholders in buildings with up to 50% non-residential floor space to purchase their freehold or claim a right to manage.
The proposal also considers the recommendations for leaseholders to require a landlord to take on leases for any non-participating units following a collective enfranchisement; the introduction of a non-residential limit for individual freehold acquisitions; and changes to voting rights in right to manage companies.
The paper also highlights the consideration for how shared ownership products could work in commonhold settings; and the provision of information for buying and selling a commonhold property.
It is clear that change, and possibly significant change, is on the horizon and the consultation will inform government assessments in the reform, but it is still unclear how and when this is likely to take effect.