Detail Is Still Lacking In Leasehold Reform Plans
Writing in Property Week Louise Uphill, Senior Associate, Moore Barlow is correct to point out that two years have now passed since the Leasehold and Freehold Reform Act received royal assent, but we are no closer to knowing when its most significant provisions will actually take effect, write Clive Scrivener MRICS and Zah Azeem MRICS, Partners at Wimbledon based Chartered Surveyors Scrivener Tibbatts.
As she says, what is certain is that reform is coming. Ministers continue to reaffirm their commitment to abolishing marriage value and introducing 990-year lease extensions. But the detail remains unresolved.
The valuation rates that will determine enfranchisement premiums are yet to be consulted on. Technical flaws in the 2024 act require further primary legislation before the enfranchisement provisions can be switched on. The draft Commonhold and Leasehold Reform Bill also has its challengers, adding more complexity and delay.
The litigation brought by freeholder groups, dismissed by the High Court last October but now proceeding to the Court of Appeal, is part of this picture, but it should not dominate it. Even if the government secures the expected favourable outcome, it would not by itself create a workable valuation framework. That still depends on secondary legislation and a consultation yet to begin.
This leaves the market in limbo. Leaseholders are delaying lease extensions in the hope costs will fall once reform takes effect, despite having no fixed date to plan around. Freeholders and investors cannot properly assess the value of their reversionary interests while the rules that will determine that value remain unwritten. Conveyancers, valuers and lenders are advising clients against a shifting legislative backdrop.
As Louise concludes, “Whether these reforms correct a longstanding unfairness or interfere with property rights, continued uncertainty helps no one. The market does not need every question answered immediately, but it does need a credible timetable and clarity on the new methodology. Key decision-makers and ministers should set out a firm implementation schedule now, rather than allowing further delay to define this reform.”
If you would like to discuss something related to a property valuation, specifically a Lease Extension, Freehold Valuations and Market Valuations for disputes, please contact Clive or Zah direct via email at clive@scrivenertibbatts.co.uk and zah@scrivenertibbatts.co.uk or call 020 8947 7040.
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