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Stranglehold or leasehold?

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By David Hitchcock

At its best, “leasehold” property is a simple concept – it refers to a long lease of land (residential or commercial) which ends at some future point, when the property will return to the landlord. However, the complexities of leasehold ownership and the surrounding law are rarely straightforward. There has been much in the national press over the course of many months regarding the Government’s plans for the system and the majority of articles published in the media have been outcries at the “murkiest and most lucrative corner of the residential market: the leasehold system”[1] which often highlight the most extreme cases of unfair leases that allow landlords to charge exorbitant ground rents, service charge and maintenance contributions.

Between October and December last year the Government consulted on reform of the system in England and Wales including plans to:

  • Ban unjustified use of leasehold ownership for new-build houses (potentially applying this retrospectively from December 2017)

  • Implementing a cap on ground rent

  • Ensuring charges for maintenance are fairer and more transparent.

At TWM, we deal with leasehold law on a daily basis. The system is a result of hundreds of years of consolidated laws which often seem extremely outdated and unnecessarily complex. This is true in residential as well as commercial property but the system can have benefits including for investors, developers and occupiers alike. The full text of the Government’s consultation can be found online here and should be of interest to landlords, tenants, investors and lenders alike.

Our guess is that reforming the system is unlikely to be quick, easy or straightforward and, perhaps tellingly, is dependant on parliamentary time. Until the system is simplified, there are a myriad of spiky issues for the unwary including the much publicised issue of ground rents and service charges, but also repair covenants, subletting, enfranchisement and the right to manage. Whatever your position TWM can help – we are one of only 13 law firms recently recommended for Landlord and Tenant law in The Times Best Law Firms 2019, as well as maintaining our historic recommendations in The Legal 500 and Chambers and Partners independent legal directories.

[1] "The leasehold system is a money-making racket. Reform is long overdue" by Sebastian O'Kelly, writing in The Guardian. 20 July 2018

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