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Government consults on leaseholder rights in mixed use properties

Reform of leasing law following the Grenfell Tower cladding scandal could make it easier for residential leaseholders in ‘mixed-use’ properties to buy their freeholds.

This is the proposal included in new consultation, published this week by the . It comes within the context of a drive to reform leasehold law to make it fairer to leaseholders. Millions of leaseholders are already set to benefit from changes announced last year that will allow leaseholders the right to extend their leases by up to 990 years at zero ground, said the Government.

It also follows Housing Secretary Michael Gove’s announcement of a ‘re-set’ of the Government’s approach to building safety that includes a commitment to protect leaseholders and make wealthy developers and companies pay to fix the cladding crisis.

‘The current leasehold system is outdated, unbalanced and broken and we are determined to fix it’, said Leasehold Minister, Lord Stephen Greenhalgh launching the new consultation.

‘Our proposals aim to rebalance power and should see more leaseholders than ever before owning the full rights to their homes.  

‘This comes on top of our new approach building safety, which includes decisive action to protect leaseholders’.

Under the current system, not all residential leaseholders in England and Wales can elect to buy out their freeholder or take over the management of their building, in what is known as a ‘right to manage’.

If shops and other similar properties take up over 25 per cent of the total floorspace, then leaseholders cannot collectively bid to take control of their building.

The new proposal is that the 25 per cent stipulation be increased to 50 per cent, empowering many more leaseholders in mixed use properties the right to have more control over how shared facilities are run and have the final say on building maintenance costs.

Other proposals in the consultation aim to make it cheaper for leaseholders to buy their freehold collectively. A ‘mandatory leaseback’ would require landlords to keep a lease on some properties in the building. This means reducing the cost of a collective buyout of their building – making it a reality for thousands more leaseholders.

The Government is also calling for views on changes to support greater use of commonhold, as an alternative form of homeownership to leasehold – including for those in Shared Ownership schemes in England.

The consultation on Reforming the leasehold and commonhold systems in England and Wales is to run for six weeks until 22 February 2022.