Key Facts

• Clause 9 amends the Leasehold Reform Act 1967.
• Clause 10 makes changes to the Leasehold Reform, Housing and Urban Development Act 1993.
• Schedule 2 details steps for calculating price payable for lease extensions and freehold acquisitions.
• Amendments are proposed to exempt certain business tenancies from the standard valuation method.
• Minor technical changes are made to assumptions in schedule 2.
• Typographical errors are fixed by changing 'property' to 'premises'.
• Ground rent is capped at 0.1% of the freehold value for lease extensions and acquisitions.
• The Bill allows the Secretary of State to set rates.
• There is a proposed 10-year review period for these decisions.
• Concerns are raised about potential legal challenges and impacts on economic analysis.
• Part 6 of the bill specifies how premiums should be divided among multiple parties.
• Schedule 3 permits 'other reasonable' compensation in cases where enfranchisement claims cause devaluation or loss to other property not subject to the claim.
• Schedule 4 defines many terms used in schedules 2 and 3 that determine the make-up of an enfranchisement premium.
• Marriage value is seen as a feudal and predatory practice.
• Leaseholders pay both their own fees and the freeholder's fees due to marriage value.
• Linz Darlington wrote an article explaining the unfairness of marriage value.
• The Bill deals with existing contracts entered into by buyers and sellers.
• There is a political decision to redistribute value, which involves schedule 2 determining the basis for redistribution.
• A public consultation on ground rents has been conducted but results are not yet available.
• The debate involves philosophical questions about whether marriage value is real or hypothetical.
• Ground rent is described as a payment for nothing, which is considered unfair by many leaseholders and organisations like the Competition and Markets Authority.
• Richard Fuller raises concerns about ensuring the legislation is legally secure in cases where there has been no price gouging or performance issues under contract.
• The Bill seeks to limit ground rents to 0.1% of property value or £250, whichever is higher.
• Lee Rowley acknowledged that the proposal is proportionate due to market constraints in housing.
• There are concerns about unintended consequences and the need for additional information before changes.
• Amendment 60 disappplies the standard valuation method for freehold enfranchisement of shared ownership leases.
• Amendments 61, 66, and 69 provide clarity on valuation methods and rights for shared ownership leaseholders.
• Government amendment 74 amends the Leasehold Reform Act 1967 to give shared ownership leaseholders the right to a 990-year lease extension.
• Amendments 60, 61, 66, 69, 70, and 74 are being discussed.
• Amendment 62 ensures that intermediate leaseholder grants a lease extension, merging leases for valuation purposes.
• Amendment 65 clarifies the market value of premises being valued under specific circumstances.
• Amendment 66 provides that rent payable in respect of a tenant's share in shared ownership is to be considered.
• Amendments aim to address valuation methods and deferment rates.
• Current valuation system is complex, unpredictable, inconsistent, and irrational.
• Law Commission's 2020 report highlights flaws in current law.
• Proposing fixed deferment rates may prevent leaseholders from acquiring their freehold or extending their lease at a fair price.
• Sportelli judgment sets deferment rates at 4.75% for houses and 5% for flats.
• The Government plans to give the Secretary of State power to set both capitalisation and deferment rates.
• Paragraphs on pages 98 and 99 commit to a review every 10 years but propose more frequent reviews may be necessary.
• Amendments 146 to 149 and amendment 2 seek to provide guidance around discount rates.
• The Sportelli judgment was made when the Bank rate was 4.5%.
• Property prices vary by region, such as in Bedfordshire versus London.
• Caroline Dinenage introduces Government amendments 70, 71, 33, 34, 39, 40, and 73.
• Amendment 70 is consequential on Amendment 73.
• Amendment 69 relates to shared ownership leases.
• Amendments 29, 4, and 5 aim to prevent leaseholders from paying landlords' non-litigation costs in successful claims.
• Amendment 128 would remove section 89D regarding leaseback grants under Chapter 1.
• Government new clause 7 would restrict variable service charges for non-litigation costs related to enfranchisement, extension, and right to manage claims.
• New clause 7 closes a potential loophole in the Bill.
• The new cost regime prevents landlords from recovering process costs via variable service charges.
• The prescribed format would include application of charges for insurance.
• New clause 7 prevents landlords from using service charges to recoup costs not entitled to them.
• Amendments 4 and 5 would remove provisions allowing landlords to receive process costs in low-value claims.
• Proposed new section 19A(1) lists exceptions protecting landlords, including non-litigation costs exceeding the premium payable in low-value cases.
• The current law requires leaseholders to pay for certain non-litigation costs incurred by landlords when responding to enfranchisement or lease extension claims.
• Landlords are over-compensated for non-litigation costs under the existing statutory regime.
• The Law Commission’s 2020 final report on enfranchisement highlights that landlords receive both a price for the asset being sold and their reasonably incurred non-litigation costs on top.
• The MP expresses concern about landlords circumventing the Bill's intent.
• Leaseholders face significant legal and financial challenges due to imbalances of power.
• The statement highlights specific examples where freeholders have imposed costs on leaseholders through service charges.
• Amendments 29, 30, 31, and 32 are made or proposed.
• Amendment 4 is put to a vote and rejected with 6 Ayes and 8 Noes.
• The concern is that the prescribed sum for low-value claims could become the de facto minimum amount payable and may lead to litigation.
• Clause 14, as amended, is being discussed.
• Amendment 35 introduces a new section (21ZA) conferring jurisdiction on appropriate tribunals for specific types of proceedings.
• Amendments provide provisions for tribunal actions in cases where landlords cannot be found or identified.
• Amendments 35, 38, 41, and 42 support jurisdictional changes in the 1967 Act.
• Clause 14 moves enfranchisement disputes to tribunals for simpler resolution and cost savings.
• Clause 15 transfers jurisdiction of leasehold house disputes from courts to tribunals.
• Clause 18 prevents use of High Court as an alternative forum for determining enfranchisement matters.
• The current law divides responsibility for resolving enfranchisement disputes between the county court and the tribunal.
• Clauses 14 to 17 amend both the 1967 and 1993 Acts to transfer jurisdiction from the county court to the first-tier tribunal (FTT).
• The FTT's caseload is gradually increasing due to leasehold management work, rent repayment orders, and disputes under the Building Safety Act.
• Clause 19 brings schedule 6 into effect.
• Statutory break rights allow landlords to end an extended lease at limited windows, such as the last year of the original lease term and the last five years of each subsequent 90-year period in a 990-year extension.
• Break rights can only be used with a court order and require compensation for leaseholders.
• The amendments are part of Schedule 6 in the Leasehold and Freehold Reform Bill.
• These clauses aim to reduce rental costs for tenants by limiting excessive rents through intermediate leases.
• Relevant legislation includes the LRA 1967 and LRHUDA 1993.
• The Leasehold Reform Act 1967 is amended through paragraphs 5A to 5F.
• Paragraphs 3 to 6 of Schedule 4 in the Housing and Planning Act 1986 are omitted.
• Section 1(1A) and section 3(2)(other than...) of the LRA 1967, along with sections 33A and Schedule 4A, are being repealed.
• The amendments affect section 7, definition of ‘long lease’.
• Section 5 is amended to exclude certain shared ownership leases from collective enfranchisement rights (section 5J).
• New terms are defined in sections including ‘shared ownership lease’, ‘tenant’s share’, and conditions for excluded shared ownership leases (sections 5K, 5P).
• Amendment 44 modifies clause 21.
• Government amendment 75 corresponds to changes in Schedule 7.
• Clause 21 introduces a right for leaseholders to buy out ground rent without extending leases if the remaining term is 150 years or more.
• The cap on ground rent buy-out premium is set at 0.1% of the freehold value.