Radical proposal to make escaping 'leasehold trap' easier for homeowners raised by Law Commission

Current law is 'complex and expensive, and leads to unnecessary conflict, costs and delay'

There are over four million leasehold properties in England, according to a government estimate (Getty)

A radical proposal to make it easier and cheaper for homeowners to escape the so-called “leasehold trap” and buy the freehold of their houses has been put forward by the Law Commission.

The legal watchdog suggested a change in the valuation formula in order to reduce prices, and a removal of the requirement that freeholders must have owned their house for two years before making a claim to buy it.

But it said the changes would still provide sufficient compensation for landlords.

There are over four million leasehold properties in England, according to a government estimate. While 1.4 million are houses, the majority are flats.

Leasehold has been described as owning the house, but not the land it is on. In effect, it means the buyer owns a property for a fixed number of years on a lease from the landlord.

The Law Commission’s proposals include reducing the price leaseholders pay to the landlord by changing the formula used to calculate the cost, improving the right for leaseholders to buy the freehold from their landlord, and introducing an alternative right to purchase unlimited longer lease extensions without a ground rent.

It also suggested making the enfranchisement procedure simpler to understand, as well as removing the need for leaseholders to have owned the lease for two years before making a claim.

The proposals recommend potentially scrapping whether leaseholders should contribute to their landlord’s legal costs, or a cap on the maximum amount they should pay.

The law commissioner, Professor Nick Hopkins, said: “Enfranchisement offers a route out of leasehold but the law is failing homeowners: it’s complex and expensive, and leads to unnecessary conflict, costs and delay.

“We’ve heard of untold stress caused to homeowners who have had to put their lives on hold because of issues with their leases.

“Clearly, that’s not right, and our solutions for leasehold houses will provide a better deal for leaseholders and make sure that the law works in the best interests of house owners.”

The proposals come after the government announced plans to ban the sale of houses on a leasehold basis.

The Law Commission will publish a consultation paper in September which will be subject to full public consultation.