THE COMMONHOLD AND LEASEHOLD REFORM BILL

FACT SHEET No 5 –  LEASEHOLD HOUSE

The Commonhold and Leasehold Reform Bill includes a number of changes to the rights for leaseholders of houses. These reflect the Government's commitment to rationalise the procedures between leasehold flats and houses and simplify the rules where this would be both justified and beneficial.

The Commonhold and Leasehold Reform Bill provides new rights for leaseholders of houses under the Leasehold Reform Act 1967 as follows: -  

Replace the residence test with a new requirement that leaseholders must have held their lease for at least two years before exercising the right to enfranchise or acquire an extended lease;

Abolish the low rent test

Enable leaseholders to buy their freehold after the extended lease has commenced.  The valuation basis for enfranchisement following extension will be the open market value of the property, which will include marriage value;

Provide that, where marriage value is payable, it will be split 50/50 between the leaseholder and the landlord;

Provide that marriage value is automatically disregarded where the lease has more than 80 years left to run;

Improve the rights of those who have inherited a leasehold house from a deceased leasehold who qualified for the right to extend their lease and/or enfranchise.  Personal representatives will have the right to enfranchise and/or extend the lease following grant of probate or letters of adminstration;

Provide that where leaseholders extend their lease but do not buy the freehold, they will become entitled to an assured tenancy under Part I of the Housing Act 1988  when their extended lease expires;

Include sub-tenants who would not otherwise qualify.  This would bring the rights for these leaseholders in line with those currently enjoyed by long leaseholders of houses who do not extend their original lease.

Absent landlords

The Bill also simplifies the procedures for enfranchisement of houses where the landlord cannot be traced. Leaseholders would be able to apply to a county court (rather than the High Court) for a vesting order;

Leasehold Valuation Tribunals would determine the price payable (rather than a surveyor appointed by the President of the Lands Tribunal, as at present).