Mary-Anne Bowring, group managing director at Ringley comments:
“The Law Commissions report into leaseholds is a timely announcement, coming just as the government looks to get the housing market going again.
“The proposals to streamline and simplify the process of buying the freehold are especially welcome – not least because every lease is getting shorter. It is debatable whether the process simplification will equitably offset the proposed extension to permitted development rights which would allow certain building owners to add another two storeys without planning permission thereby increasing what is known as the hope value of a building, making purchasing the freehold of a building more expensive.
“Similarly, improving leaseholders Right To Manage their building is also welcome. In many smaller blocks especially, because if there is harmony self-managing can be an option, insurance commissions can be saved, budgets and major works plans can be set by those who want to maintain their asset value, not by an absentee freeholder whose disillusioned by the diminishing value of his reversionary interest may have given up.
“The Law Commission’s report carries the oft-repeated call for converting leasehold flats into commonhold but this wouldn’t be as simple as people think and would create a lot of grey areas around building management. Many institutional investors such as pension funds and insurers have also invested in freeholds and ground rents are an important income stream to match their liabilities. With many having lost out on revenue with shopping centres and offices being closed, any move to commonhold needs to keep this fact in mind.”
The report an be found here: Law Commission’s report into leaseholds
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