Landlords warned leasehold changes could prove costly

Landlords and tenants could face conflict over eviction holiday rules
Mark Steggles, of Thomson Snell & Passmore

Earlier this month, The Law Commission of England and Wales published a report setting out options to reduce the cost that leaseholders have to pay to buy the freehold or extend the lease of their homes – known as ‘enfranchisement’.

Currently, when a homebuyer purchases a leasehold property, they do not possess it outright. Instead, they gain the right to occupy it for a set number of years.

When a property is sold on, the number of years left is also sold, although leaseholders have the right to ask for an extension.

However, landlords have been known to charge tens of thousands of pounds for this, due to something called ‘marriage value’, which can be added when a lease has fewer than 80 years left and can result in hefty payments from leaseholders to landlords.

The new reforms not only have the potential to make the process easier and more affordable for hundreds of leaseholders in Tunbridge Wells and Tonbridge who wish to buy their freehold or extend their lease, but also they do away with the marriage value, something that could be bad news for landlords, but good news for tenants.

Mark Steggles, a Partner at the Tunbridge Wells-based law firm Thomson Snell & Passmore, explained: “The Law Commission’s report sets out a path for making leasehold enfranchisement simpler, more transparent and cheaper for leaseholders.

“The report sets out three alternative options for a new regime for calculating the premiums payable to extend a lease or purchase a freehold, and a further seven sub-options in terms of items to consider when calculating the premiums for each regime.”

But he warned: “The potential abolition of marriage value (the increase in value that occurs where a tenant acquires the freehold) is the proposed reform most likely to concern landlords, as it would decrease the value of the premiums payable by the tenants.

“However, this proposed reform – together with the proposed introduction of prescribed rates for calculating premiums and a suggested route for capping the impact of ground rent escalators that are causing
such controversy at the moment – are likely to be warmly received by leaseholders,” added the lawyer.

Share this article

Recommended articles


Please enter a search term below.

Subscribe To Our Newsletter