Key Facts

• Professor Nicholas Hopkins is the law commissioner for property, family and trust law.
• The Law Commission’s work on enfranchisement and commonhold began in 2017.
• Matthew Pennycook declares an interest due to his wife being a joint chief executive of the Law Commission.
• The Law Commission made around 350 recommendations in total.
• Around 120 recommendations were specifically on commonhold.
• The consultation period for the reports was from September 2018 to January 2019, with over 1,600 responses collected.
• The Bill uplifts from 25% to 50% in certain aspects.
• Commonhold is not within the scope of the current Bill.
• A leaseholder with three or more flats cannot participate in enfranchisement claims.
• Discount rates for enfranchisements will be prescribed by the Secretary of State.
• The Law Commission provided options to reduce prices payable while ensuring sufficient compensation to landlords.
• The impact assessment of the Bill shows £2.984 billion in present value costs, with £2.8 billion being transfers and £400 million benefits.
• Matt Brewis is the director of insurance at the Financial Conduct Authority responsible for regulation of all brokers and insurers operating in the UK.
• FCA is responsible for insurers and brokers but not freeholders or property management agents.
• Insurer risk prices doubled between 2016 and 2021, while brokerage charges increased by more than three times.
• Service charges added on increased by about 160%.
• The FCA's new rules on fair-value insurance products came into force on December 31, last year.
• Insurance premiums have increased despite these regulations due to building quality issues and structural problems.
• The Bill aims to ban commissions paid by insurers to managing agents, further reducing costs for leaseholders.
• The Financial Conduct Authority (FCA) rules require brokers to provide contract information.
• Leaseholders can request a copy of the insurance contract directly from insurers if landlords do not provide it.
• Clause 31 of the Bill deals with fees for insurance services but does not specify that these must be reasonable.
• Harry Scoffin is the founder of Free Leaseholders and deputy chair of One West India Quay residents’ association.
• Karolina Zoltaniecka is the founding director of Commonhold Now, a right-to-manage director in Australia with over three decades of experience as a forensic analyst specializing in service charge audits.
• Halima Ali is a joint campaign co-ordinator for the Home Owners Rights Network advocating for regulation and adoption on private estates.
• England and Wales are the only jurisdictions that persist with the leasehold system.
• Nick Hopkins endorsed commonhold in 2020.
• Developers should provide residents with a share of freehold when buying new flats.
• Current shared ownership leases must be for 990 years.
• Ground rents were abolished two years ago.
• The academic on the Commonhold Council stated that super-long leases and zero ground rent make it cost-free for developers to hand over the freehold.
• Agreement rates could be lowered from 100% to 75% for commonhold conversion.
• Halima Ali lives on a leasehold estate for 13 years where no proper management takes place.
• Residents are paying £30,000 annually to maintain a field half the size of a football pitch.
• Local councils refuse involvement in these issues due to lack of regulation and concern.
• Forfeiture clauses allow freeholders to take back property over minor breaches.
• Only about 80 to 90 cases of forfeiture occur annually, but it creates a significant threat to leaseholders' security.
• The Building Safety Act regime makes it difficult for court-appointed managers to manage buildings over 18 meters high.
• Some blocks may never be able to buy the freehold or obtain right-to-manage rights due to monopolistic positions of certain freeholders.
• There are no specific provisions to prevent forfeiture issues in the Bill.
• Forfeiture should at least return equity to departing leaseholders when the flat is sold and only the debt goes back to the freeholder.
• The limit for non-residential premises from 25% to 50% does not help mixed-use buildings linked with commercial properties.
• A managing agent appointed by the freeholder should work directly for leaseholders rather than third parties.
• The Bill does not ban new leasehold flats—70% of leaseholds are flats.
• There is a push to include 'share of freehold' as an interim measure while waiting for commonhold implementation.
• Some homeowners are paying twice for areas that should be covered by council tax.
• Caroline Dinenage chairs the session until 4:15 pm.
• Andrew Bulmer is CEO of The Property Institute, managing about 1.5 million leaseholds.
• Angus Fanshawe specializes in leasehold enfranchisement for both leaseholders and freeholders with over 30 years of experience.
• Lord Best’s working group recommended a regulator with a code of practice and mandatory competency standards.
• The Building Safety Act introduced a building safety manager role, which is now effectively the property manager.
• RMC directors are made the principal accountable person under the Building Safety Act.
• Cadogan v. Sportelli set deferment rates at 4.75% for houses and 5% for flats.
• Managing agents warmly welcome regulation of managed estates.
• Mr Bulmer has personal experience managing estates that are disproportionate to required regulations.
• The equity in a forfeited property is called for to be returned to the leaseholder.
• Kate Faulkner is chair of the Home Buying and Selling Group.
• Beth Rudolf is director of delivery for the Conveyancing Association.
• Current issues include lack of mandatory requirements for time and fees in home buying and selling information.
• Witness recommendation: Mandate up-front information specifically for leasehold to educate consumers and reduce fall-throughs.
• Leasehold property inquiries are supported by TPI, RICS, the Law Society, and the Conveyancing Association.
• Only five questions out of many raised are time-sensitive.
• Charges for information can reach up to £800 and often involve multiple parties and duplications.
• National Trading Standards issued guidance on 30 November 2023.
• A promise was made in 2018 to make leasehold property inquiry information available at a cost of £200 within 10 working days.
• Conveyancing transactions currently take about 20 weeks before contracts can be exchanged.
• Dematerialisation of deeds has led to a loss of important property information packets that were traditionally kept in fireproof safes.
• Property data digitization and storage would improve transparency, allowing for quicker and more informed sales processes.
• In Norway, Denmark, and Australia, binding offers with cooling-off periods are facilitated by comprehensive property data management.
• The home report in Scotland has reduced fall-through rates by 60%.
• Transaction times have been reduced from 22 weeks to 10 weeks due to collaboration between estate agents and conveyancers.
• Worcester county authority faces a £35 million overspend on adult social care, impacting the adoption of public open spaces.
• Professor Tim Leunig, director of Public First, gave evidence on the effectiveness of leasehold systems.
• He stated that while the Bill is a step forward, it does not fully address all issues with leaseholds.
• Professor Leunig recommended moving to commonhold as it constrains fewer improvements and reduces risks associated with forfeiture.
• The government's programme is criticised for a lack of understanding of financial impacts.
• The best estimate of present value is £90 million with ranges from minus £1.5 billion to plus £1.5 billion.
• The business net present value is scored at minus £1.7 billion.
• The Bill is described as a redistributive measure with significant impacts in London and southeast England.
• Professor Leunig suggests that the redistribution affects different segments of society based on property values.
• The discussion includes historical examples of property rights, such as compensating slave owners for abolition.
• Professor Leunig discusses a case where a seed potato exporter's business became non-viable due to Brexit regulations without compensation.
• At the end of the covid-19 pandemic, a compulsory arbitration scheme was implemented for commercial rent arrears.
• The standard commercial clause allows landlords to reoccupy properties and seize goods if rent is not paid on time.
• Professor Leunig emphasizes the importance of a cleaner and clearer property market to facilitate economic growth.
• The professor sees no meaningful risks in moving to 999-year leases over 99-year leases or ending leasehold for houses.
• He suggests that flats should be included within the scope of the Bill as more people are expected to live in them due to urban density.
• The Government proposes five options for reforming ground rents, ranging from capping peppercorn payments to freezing current levels.
• Dr Maxwell mentions a presumption of compensation when property rights are entirely extinguished under A1P1.
• The estimated change in asset value due to loss of ground rent income is £27.3 billion.
• Dr Maxwell notes potential losses of £5 billion in ground rent and £27 billion in value over ten years under option 1.
• There is a risk that implementing certain options could result in legal challenges from landlords due to significant loss in property value.
• Strasbourg case authority from Norway, including Lindheim and The Karibu Foundation cases, indicates that caps on ground rent can be challenged but may also reflect Parliament's broad margin of appreciation.
• The session is ending before the Minister concludes speaking in the Chamber.
• The Committee will reconvene on Thursday at half-past Eleven o'clock.
• Dr Maxwell provided legal insights regarding leasehold and freehold reforms.