Leasehold Reform Bill

Official Summary

A Bill to make provision about the regulation of the purchase of freehold by leaseholders; to introduce a system for establishing the maximum charge for such freehold; to make provision about the award of legal costs in leasehold property tribunal cases; to establish a compensation scheme for cases where misleading particulars have led to certain leasehold agreements; and for connected purposes.

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Overview

The Leasehold Reform Bill aims to make it fairer and more transparent for leaseholders to buy their freeholds. It sets a maximum price for freehold purchases, prevents unfair cost burdens on leaseholders, introduces a compensation scheme for those misled about freehold purchase options, and launches an inquiry into leasehold practices.

Description

This bill focuses on several key areas of leasehold reform:

Freehold Acquisition Price:

The bill sets a maximum price for buying the freehold of a property. The price will be calculated using a formula set by the Secretary of State, not exceeding ten times the annual ground rent.

Enfranchisement Costs:

Leaseholders will no longer be responsible for costs incurred by the freeholder during the freehold acquisition process. This includes costs related to legal notices, investigations, title verification, valuations and conveyancing.

Compensation Scheme:

A compensation scheme will be established for leaseholders who were misled by vendors into believing they could buy the freehold for a certain price after a specified period, only to find the price higher than initially communicated.

Inquiry into Leasehold Practices:

An independent inquiry will investigate various aspects of leasehold ownership, including the prevalence of leasehold sales, the freehold market, relationships between developers and other parties involved in property sales, and the impact of government housing policies on leasehold prevalence.

Government Spending

The bill will likely lead to increased government spending due to the establishment of the Enfranchisement Compensation Scheme and the independent inquiry. Exact figures are not provided in the bill text.

Groups Affected

Leaseholders: Potentially benefit from lower freehold purchase prices, reduced costs, and compensation for misleading information.
Freeholders: May see reduced income from freehold sales and increased scrutiny of their practices.
Developers: Will likely face increased scrutiny of their sales practices and may incur costs related to the inquiry's findings.
Solicitors and Conveyancers: Their practices will be subject to review by the independent inquiry.
Government: Will need to fund the compensation scheme and the independent inquiry.

Full Text

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