Head of Leasehold and Estate Management, Will Parrick gives his take on the latest industry news...

Yesterday (20th September 2018), we received an urgent newsflash from professional body, the Institute of Residential Property Management (IRPM) with regards to the publication of the 13th Law Commission’s Consultation Paper on reform in leasehold enfranchisement. I have a copy of the consultation paper summary sitting next to me right now, promising fascinating weekend reading!

For those of you who don’t know, Leasehold Enfranchisement involves Leaseholders trying to utilise their legal right to purchase the freehold of their property. The suggested reforms are part of an ongoing promise made by the current Government to shake up and “fix” the many problems in our existing Leasehold system.

The Commission’s project has focused on three key areas: making it easier for Leaseholders to buy the freehold of the block of flats in which their property is situated (collectively with the other Leaseholders of the block); making it easier for the owners of Leasehold Houses to purchase their freehold (which could be welcome relief to the many people across the country who have found themselves saddled with virtually unsellable properties), and simplifying the process of extending Leases.

According to the IRPM, the Consultation Paper “sets out significant changes to the way leasehold enfranchisement might work going forward”. The Commission has sought to make the process of Enfranchisement quicker and more cost effective by simplifying procedures and reducing legal costs.

Such reforms would be timely since, as anyone who has been involved with it knows, Enfranchisement is a complex, lengthy and expensive procedure. Let’s take using Enfranchisement Rights to purchase the freehold of a block of flats as an example. At present, in order for a Leaseholder in a block to exercise their right, one must have the support of at least fifty percent of qualifying Leaseholders in the block.

Just getting over this initial hurdle can be extremely challenging as these days as (if many of the blocks on our portfolio are anything to go by) owner-occupiers are in the minority so one cannot communicate with one’s fellow Leaseholders simply by knocking on the doors of the other flats. And that is just the beginning. Once support has been garnered, the next challenge is to convince people to part with their hard-earned cash which does not always look so appealing when the process is risky and quite often there is a question mark over the final bill.

Should you be in a position to get enough support, you must make sure you collectively meet a lengthy list of other criteria before even beginning to serve the requisite legal notices. You better have proficient (therefore often expensive) legal representation as the ensuing procedure can be a minefield where any wrong step (even wrong wording or not adhering to prescribed timescale) could see the whole process undone! Bearing all this in mind, it is high time that there were reforms implemented to simply the process and make it more cost effective.

Of course, on the other side of the coin are the investors who own such freeholds. The Commission must be careful not to vilify these investors, who are not (contrary to the popular myth) all Scrooge-eque miserly rip-off merchants out to make a quick pound. Any change to the process must be fair to both sides and see that freehold investors are adequately compensated.

And all this is just referring to one of the three aspects of the consultation! The Law Commission certainly have their work cut out for them. However, as previously stated, any reform would be timely. I will read the summary with interest and can only hope that we will eventually see some significant action.

If you are interested in exercising your Right to Enfranchisement as a Leaseholder, please do get in touch. We can offer you advice based on our experiences and recommend quality local solicitors to help you through the process along with our support.