Housing Minister: ‘Why leasehold reform is taking so long’

Housing Minister Matthew Pennycook has attempted to explain delays in reforms for existing leaseholders, and it turns out it is the previous Tory government’s fault.

Pennycook said in a Twitter/X post that following publication of the Draft Commonhold and Leasehold Reform Bill last week, lots of existing leaseholders have been in touch seeking clarity as to when the Government plans to make it “cheaper and easier” to extend a lease or buy a freehold.

He said: “Among the provisions of the Leasehold and Freehold Reform Act 2024 which was passed in the dying days of the last Parliament is a new method for calculating the price of a statutory lease extension or freehold acquisition, known as the valuation process.

“The Act’s revised valuation process will remove the requirement for marriage value to be paid; cap the treatment of ground rents in the valuation calculation at 0.1% of the freehold value; and allow government to prescribe the rates used to calculate the enfranchisement premium.”

High court challenge to consultation

The Government successfully defended a high court legal challenge against these reforms in October and Pennycook said a consultation is now being prepared to establish what valuation rates should be used to calculate the enfranchisement premium. 

He said: “We will launch that consultation in the coming months. The rates will ultimately be set by the Secretary of State in secondary legislation.”

But he warned that even with the valuation rates established, the Government will not be able to commence the relevant enfranchisement provisions in the 2024 Act until it has rectified a “small number of specific flaws that were contained in it.”

Closing leasehold loopholes

Pennycook said: “These include a loophole which means that the 2024 Act goes far beyond the intended reforms to valuation and that undermines the integrity of the amended scheme.

“That the previous government passed the 2024 Act knowing these flaws existed is deeply regrettable. It is also why this Government is balancing speed with care as we enact reforms and why we’ve asked the Select Committee to subject our Bill to enhanced pre-legislative scrutiny.”

He said the specific flaws in the 2024 Act must be fixed through primary legislation, adding:  “Once the valuation rates have been set and the flaws in question have been fixed, we will commence the 2024 Act’s enfranchisement provisions.

“While it is important that we take the time to ensure that reforms are watertight, I appreciate fully the need to act as quickly as we can to provide relief for leaseholders across the country, particularly those with leases approaching 80 years.”

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