Extending your lease? Further recommendations are anticipated during 2020.
Following a consultation during 2018/19 the Law Commission presented the Government with three possible options for altering the calculation as to the premium payable for a Lease extension/ enfranchisement on 9th January 2020.
Under the Leasehold Reform Housing and Urban Development Act 1993 (as amended) a Lessee currently has the right to a 90 year lease extension at a peppercorn ground rent subject to paying the Freeholder a premium and their associated professional fees.
It was considered that the existing process could be open to abuse and therefore the Government have sought to make the residential leasehold sector more transparent and fair.
The three options put forward are to:
1. Assume the leaseholder is not the market which would seek to abolish marriage value entirely
2. Assume the leaseholder is not in the market currently but may be in the future and therefore have a discounted variation of marriage value
3. Assume the leaseholder is in the market which would adopt marriage value in its current form
The Law Commission are clear that they have not made any recommendation and the above will be food for thought as to what the Government may decide to do and how they may amend current law. Consideration will however be given to the Landlords Human Rights to compensate for their legitimate property interests.
Consideration has also been given to prescribing rates applied and a possible cap on ground rents which could assist those leaseholders were the rent passing could be considered onerous.
I need to extend my lease soon – when is this happening?
Further recommendations are anticipated during 2020. Reform appears likely in the coming years however the form remains unknown.
Sadly for leaseholders, the Law Commission's proposals are only that for now. It's now down to the Government to consider the proposals, but there's no timescale as to when this might take place.
If your lease extension is urgent, you'll need to use the current system. This is a complicated area and you'll need professional advice.
See our lease extension guide for more information about what you need to do and how much it could cost.
For more information please contact Greg Rowland.
DIRECT LINE: 01494 689616
MOBILE: 07843 054770