As per a new scheme introduced by the UK government, more leaseholders will be able to own their own properties. Now, leaseholders in England and Wales will find it much easier, and definitely cheaper, to purchase the freehold of their apartment building, all because of a new proposal that has been introduced by the UK government to create fairer housing systems. Estate agents in Sittingbourne believe that this new proposal could change the future of enfranchisement, thus making lease ownership fairer and more affordable. Here is everything you need to know about this new proposal.
What is the new proposal for leaseholders to own their own properties?
The UK government plans to expand the access to enfranchisement, in layman terms, the access to buying a freehold property, as well as the ‘right to manage’ a residential building. This new proposal will essentially increase the non-residential limit in a building from 25 per cent to 50 per cent, hence allowing the leaseholders in the building to buy a freehold or even claim a right to manage the building. Keep in mind, this proposal is being created for buildings with up to 50 per cent non-residential floorspace.
The UK government is also thinking about a complimentary proposal under which leaseholds can require a landlord to take on the lease of any non-active units, considering a collective enfranchisement. The government is also thinking about introducing a non-residential limit for freehold acquisitions by individuals. And lastly, the UK government also plans to introduce changes to the voting rights in ‘right to manage’ buildings and companies.
For now, the UK government and the Welsh government have considered this proposal as the future of leasehold ownership, and agree that these proposals, in principle, will broaden access to buying freehold property as well as the ‘right to manage’.
What are the benefits for leaseholders?
For one, leaseholders will have the ability to own their own properties. Also, they will be allowed to manage their own properties, based on the ‘right to manage’. This new proposal aims to give leaseholders a chance to own their building by increasing the ownership limit to 50 per cent, from the former 25 per cent. By doing so, leaseholders will certainly have more control over how their mixed-use shared facility is run and they will even have the final say on maintenance costs and building repairs.
Has this proposal been passed?
11th January 2022 was the first day of the consultation, which was carried out by the UK government. The aim of the consultation is to speak with homeowners and housing industry experts to give their view on the proposal to allow more leaseholders to take control of mixed-use buildings, manage their own properties and even own their properties. This consultation will continue for 6 weeks, until 22nd February 2022, after which the UK government and the Welsh government will reach a collective decision.
Why has the government made this proposal?
Leasehold Minister, Lord Stephen Greenhalgh believes that the current leasehold system in the UK is outdated, broken and totally unbalanced. Hence, this new proposal has been given in order to fix the existing leasehold system. Under the current system, only a few leaseholders can buy their building through enfranchisement or manage the building, also known as the ‘right to manage’. He claims that this new proposal aims to create a balance of power, thus allowing more leaseholders than ever before to own their own property. And finally, a ‘mandatory leaseback’ will require the landlords to maintain a lease on a select percentage of properties in the building. By doing so, the cost of a collective buyout of the building will reduce drastically.
What are the main points of discussion for the consultation?
During the consultation, the government along with homeowners and the housing experts will discuss the non-residential limit for collective enfranchisement as well as the non-residential limit for ‘right to manage’ claims. The non-residential limit for freehold acquisitions by individuals will also be discussed. The government also wants feedback on their proposal to introduce mandatory leasebacks as a part of the collective freehold.
When will the proposal be implemented?
As of now, the government is in continuous talks with homeowners, landlords, investors, estate agents as well as other housing market experts. After considering all the feedback from the 6-week long consultation and making the necessary changes, the government will start working on creating the final policy. By doing so, the government will be able to create more comprehensive reforms for leasehold systems and commonhold systems.
