Scrutiny of the proposed Commonhold and Leasehold Reform Bill has begun with the Housing, Communities and Local Government Commons Select Committee launching an inquiry examining the draft legislation. Written and oral evidence will inform a subsequent report making recommendations on amends to the draft bill before its introduction to parliament.
The government published the long-awaited draft bill on commonhold and leasehold last week, describing it as a “game-changing shake up” of the leasehold system. The reintroduction of commonhold, banning new leasehold for certain types of new build property, an annual ground rent cap of £250, and making lease extension easier are amongst the proposals.
The response from the legal community to the proposals has been mixed. Perhaps most controversially, the re-introduction of commonhold as a default tenure would see the need for extensive sector understanding and training incorporating new title structures, commonhold community statements replacing leases, and automatic Land Registry changes. The Society of Licensed Conveyancers warns there is insufficient evidence of preparedness for such adoption at scale.
Concerns have also been raised about the prospect of legal action from large freeholders and pension funds who currently profit from healthy returns on ground rents.
The Select Committee’s terms of reference request evidence to be submitted around whether the proposals could work in practice, raising questions around whether the changes will tackle existing unregulated and unaffordable ground rent charges, the respective property rights of leaseholders and freeholders, the practicalities of leasehold to commonhold conversion, and timescales for implementation.
The terms of reference for the call for evidence have been published by the committee, and the deadline for submissions is 25th February. Oral sessions are expected to begin in March. Two online surveys for homeowners and leaseholders have also been launched
Commenting on the inquiry, Florence Eshalomi, chair of the Housing, Communities and Local Government (HCLG) Committee said:
“For too many leaseholders, the dream of home ownership has turned into a nightmare as they’ve faced soaring ground rent hikes and unreasonable fees.
“As a Committee, we are determined to do all we can in examining the detail of the draft Bill to ensure this legislation is effective. We want our work to help ensure the Government is well placed to introduce the legislation to Parliament as soon as possible and finally deliver the necessary reforms for long-suffering leaseholders.”
