RLA : RPI : Leasehold reforms outlined to Commons

News from the Residential Property Investor, the bi-monthly magazine for RLA members

other artilces from the February / March 2000 issue

Leasehold reforms outlined to Commons - February / March 2000

Planned legislation will make it easier for leasehold tenants to buy out a freehold interest, renew their leases, and take part in the management of the building in which they own a leasehold interest.

This is according to details of a draft Bill, expected to be published in the next three months, outlined to the Commons by Housing Minister Nick Raynsford.

Leasehold reforms will include abolition of the need to live in a leased property before being able to exercise freehold enfranchisement rights. The mini mum number of leaseholders in a block needed to insist on enfranchisement will be reduced from two thirds to half, and the qualifying threshold for non-residential use of the entire property increased from 10 per cent to 25 per cent.

The residency test for leasehold renewal rights is also to be abolished, although a leaseholder will have had to have held a lease for at least two years before exercising those rights.

Leaseholders who meet the qualifying rules for enfranchisement will be entitled to take over management of the building without proving fault or paying compensation. But the landlord will also be entitled to membership of the managing body.

There will also be new rules on accounting and a requirement for landlords to keep amounts received as service charges in separate client accounts.

The promised legislation will also introduce a new form of property ownership; commonhold. This will allow for ownership of units within a property along with a proportion of the commonhold of the building.

Introduction of commonhold tenure has been welcomed by the British Property Federation as an additional option. But it should 'not be thought of as the panacea for the problems which have been perceived with residential long leasehold', said director Richard Lambert. 'The demands, problems and requirements of community living and block management will be the same, regardless of the legal basis on which the property is owned', he said.

other artilces from the February / March 2000 issue