Transparency over ground rents, valuation reform and the unresolved technical flaws affecting implementation of the Leasehold & Freehold Reform Act 2024 remain priorities
ALEP (the Association of Leasehold Enfranchisement Practitioners) has written to the Housing, Communities and Local Government Select Committee following oral evidence given by director Mark Chick on 10 March. ALEP’s letter to the chair, Florence Eshalomi MP, sets out a series of further technical concerns which it says should be addressed as scrutiny of leasehold and commonhold reform continues and argues that greater visibility is now needed for legislation to be both workable and fair in practice.
Known flaws in LAFRA must be set out clearly
ALEP has raised concerns over the government’s acknowledgement that known flaws in the Leasehold & Freehold Reform Act 2024 (LAFRA) are delaying commencement of key enfranchisement provisions. In particular, it is seeking publication of the proposed amendments and clarification of the precise areas within the Act that ministers believe require revision. It also wants an update on progress relating to consultation on capitalisation and deferment rates.
ALEP argues that if specialist enfranchisement practitioners are able to review proposed changes before introduction, there is a better chance of avoiding further implementation problems later.
Mark Chick, ALEP director and Senior Partner at Bishop & Sewell LLP said: “Reform in this area is both necessary and welcome, but it needs to be operable. The legal and valuation framework must be clear enough for leaseholders, freeholders and professional advisers to understand how the system will work in reality. Where government has identified flaws or intends to rely on further regulations, those points should be visible and open to scrutiny now rather than after the event.”
Valuation and commonhold cannot be treated separately
ALEP states that the valuation aspects of the draft Commonhold & Leasehold Reform Bill are deeply intertwined with LAFRA and should not be treated as a separate technical afterthought. Among the issues it identifies are the position of non-participants in collective enfranchisement claims, the treatment of former freeholders in a post-enfranchisement commonhold structure and the handling of intermediate leases.
It warns that too much appears likely to be left to delegated powers and future regulations, despite the significance of those details to cost, fairness and take-up. ALEP calls for key valuation mechanisms to be clarified in primary legislation where possible, particularly where they could determine whether later participants gain an unintended advantage over those who initially bore the cost and risk of acquiring the freehold.
In conclusion, Mark Chick says, “While the prospect of leasehold reform is politically attractive in headline terms, its ultimate success in delivery depends on the technical aspects. As we have seen with LAFRA, when it comes to the law relating to enfranchisement, the key is very much in the detail. We welcome the chance to continue our dialogue with government during the course of this bill to ensure workable outcomes for all involved.”
