Level the playing field between leaseholders and landlords, CILEx urges
The law currently disadvantages leaseholders and needs to be changed to balance their interests with those of landlords, the Chartered Institute of Legal Executives (CILEx) has argued.
But it cautioned too about the pendulum swinging too far the other way and discouraging people from becoming landlords in the first place.
In a detailed 50-page response to the Law Commission consultation, Leasehold home ownership: Buying your freehold or extending your lease, CILEx said 76% of members surveyed believe that landlords are treated more favourably than leaseholders under the current regime.
But equally, it said the new regime should not adopt a ‘one size fits all’ approach which would unrealistically group together various land arrangements with differing rights and interests to consider.
“Our members showed caution against grouping landlords together into one overarching category, overlooking the existence of individual landlords and small to medium sized enterprises who do not pose the same risks (e.g. inequality of arms) as their larger counterparts.
“CILEx stresses that along with recognising these nuances within the leasehold sector, and the disparate nature of different landlords; it is imperative that reforms do not unjustifiably shift the balance of favour onto leaseholders without due regard towards landlord interests.”
Some members were concerned that, if this were to happen, there would be a risk of removing all incentives for becoming a landlord, which in turn could have major repercussions on the housing market and wider leasehold sector
CILEx argued that reform should not limit the freedom of parties to negotiate the terms of their enfranchisement in a bid to solve the underlying inequalities of arms between landlords and leaseholders, and eagerly awaits reforms to home buying and selling along with unfair terms in residential leasehold to remedy this matter.
The response highlighted the importance of improving consumer awareness of costs and processes within the enfranchisement regime, and providing clearer information to frontline practitioners on how the multitude of ongoing leasehold reforms shall interact and be prioritised.
Other key points raised by CILEx included:
- Enfranchisement reforms must take into consideration concurrent reforms within the leasehold and wider housing sector to ensure reforms are dovetailed together. Leaseholders of houses should have the right to longer lease extensions as the current 50-year period is no longer fit for purpose;
- Landlord rights to repossession for the purposes of redevelopment should be limited to the end portion of a lease, and supplemented with a mandatory notice period that provides sufficient time for leaseholders to reorganise their affairs;
- All freehold acquisition claims should enable enfranchising leaseholder/s to discharge any mortgage secured against the freehold directly;
- The qualifying criteria based on financial limits, as well as the two-year limitation on exercising enfranchisement rights, should be abolished;
- There should be standardised simpler forms provided for commencing an enfranchisement claim;
- The concurrent jurisdiction of both the tribunal and county courts to deal with enfranchisement-related disputes should be reformed as it has led to added costs, time delays and exploitation of legal process; and
- A single valuation expert would be useful in solving valuation disputes outside of the tribunal.
Philip Sherwood, the President of CILEx said:
“We acknowledge the efforts of different agencies, including the Law Commission, to address the concern that leaseholders are at a disadvantage in the current system, but reform must not be piecemeal or fragmented.
“The Law Commission consultation represents a good start to levelling the playing field and ensuring that leaseholders can assert their rights against unfair landlords.”
Kindly shared by The Chartered Institute of Legal Executives