Leasehold campaigners have applauded the Law Commission’s proposals for radical reforms, but warned that urgent action is needed by government to help those trapped in limbo.

In an article for Leasehold Knowledge Partnership, one of the charity’s co-directors Sebastian O’Kelly says the three papers published by the Commission today provide the government with a blueprint to reform the whole sector if it so chooses.

He writes: “The reports give detail of the consultations involved with stakeholders, indicating the considerable efforts of commercialisers in the sector to neuter the process. 

“There will doubtless be more at government level.

“The Law Commission deserves huge credit for largely ignoring these pressures, and producing reports that firmly put the consumers first: leaseholders typically own 95 per cent (or more) of the value of a block of flats through long tenancies yet are disempowered by the freeholder, the supposed ‘building owner’ in law, owning the remainder.”

O’Kelly argues that only England and Wales have this system, with the rest of the world using forms of commonhold.  

Today’s reports are “a nail in the coffin for predatory commercial interests seeking to exploit the ‘feudal’ leasehold system,” and “the most significant proposals for reform in a generation”, according to LKP.

However, they depend on the government’s willingness to bring the changes into force.

Right to manage reforms

On the suggested reforms to Right to Manage rules, O’Kelly says: “[The Commission] correctly identifies legal games – and costs – as the prime reason why right to mange applications fail and urges the removal of landlords’ legal costs being passed to leaseholders in the RTM process.”

He adds: “Leasehold houses would also be able to opt for right to manage, removing imposed management by the freeholder. 

“These estate charges – which also apply to many new freehold houses – are the latest monetising wheeze invented by the sector.”

Freehold purchase and lease extension reforms

LKP welcomes the Law Commission’s proposals that all new lease extensions should be 990 years with no ongoing ground rent, instead of adding just 90 years for flats and 50 for houses, which is the case at present. 

O’Kelly writes: “Again the Law Commission identifies the sector’s use of aggressive legal costs to frustrate or monetise the enfranchisement process: extending leases or buying the freehold. 

“Under its reforms, landlords would again not be able to pass on their supposed legal costs during the enfranchisement process.”

Shift to commonhold

LKP supports the call for a move to commonhold ownership, giving flat owners more say over the safety, management and upkeep of the buildings they share.

O’Kelly adds: “As the crisis surrounding combustible cladding has made painfully made clear, the one thing worse than having to co-operate with your neighbours and manage your block, is having a commercial freeholder tell you what is going to happen.

“Commonhold is far simpler and more efficient than leasehold, but also comes with responsibility, which flat owners will have to deal with.”

Urgent action needed for leaseholders in limbo

The National Leasehold Campaign has also voiced strong support for the proposals, but warns that action must be taken urgently.

A spokeswoman says: “The NLC is delighted that the Law Commission’s reports recognise how badly the current leasehold system is stacked against leaseholders and is recommending adoption of commonhold, and informed and practical routes for existing leaseholders to escape from the nightmares created by this feudal system. 

“We need government to act on these recommendations now. 

“They must not be lost in a sea of endless consultations, further consideration and drift ‘until Parliamentary time allows’. 

“Leaseholders’ lives are on hold and urgent action is needed.”