Changes in The Law Could Be Great News for Leaseholders
We know from experience…
The lease extension process in the UK is nowhere near as simple as it should be.
It’s why we founded Leasegevity in the first place…
To help support leaseholders who are confused and intimidated by an out-of-date system.
It’s why any news of potential changes to make the system easier and more affordable for leaseholders is music to our ears.
The good news is:
This month, the Law Commission published plans to do just that.
Their ultimate aim is to make extending a lease or buying the freehold simpler and more cost-effective.
It’s early days, of course. And it will only ever be small changes to begin with. But things are looking positive…
You might wonder why these plans are being published now?
What sparked the debate?
Well, the Law Commission were asked to investigate the situation last year.
One of the main reasons was down to various scandals that found a lot of new build homes were being sold with ground rents that would rise exponentially.
It’s also generally accepted that when it comes to buying a freehold, the current valuation process is less than ideal.
There are two particularly frustrating figures that currently go into working out the value of buying out a lease.
They are the ‘marriage value’ and the ‘hope value’.
The marriage value refers to the increase in the combined value of both the Freehold and Leasehold interest after a lease extension has taken place compared to the combined value before the lease has been extended…. Confusing to say the least!
And the hope value refers to the potential value that may be released at a later date by a leaseholder who extends their lease in a block of flats when the other leaseholders have previously grouped together to collectively buy their freehold.
Many consider these figures to be irrelevant and believe they shouldn’t be included in the valuation process.
Positive proposals, but is it far enough?
The Law Commission proposes three options…
One is to do nothing and let things continue as they are.
The second is to scrap either the marriage or hope value in calculations.
The third is to scrap both.
Some campaigners say they wish the Commission had gone further.
Some even call for the entire leasehold system to be scrapped.
Of course, it’s a long time before that will ever happen, if ever.
But the new report and the proposals in it do offer some hope of an improved process and, perhaps more importantly for leaseholders, a more affordable one.
We’ll certainly be keeping an eye out on what the government chooses to do next and whether they put any suggestions in the Commission’s report into action.
But in the meantime, if you’d like to find out more about the report or how it might affect you, don’t hesitate to get in touch with us here at Leasegevity.
It’s exactly this kind of thing we’re here to help with.
In fact, it’s our aim to take all the stress out of extending a lease or buying the freehold.
So, if you’re ever in doubt and want us to look into your leasing arrangement, just give us a call on 0300 400 3279 or reach us through the form below: