Research finds landlords are treated more favourably than leaseholders
Landlords are treated more favourably than leaseholders in Britain, according to legal executives but they are warning that while the balance needs to change, reform should not discourage property investment.
The current law disadvantages leaseholders, and in its response to a consultation by the Law Commission, the Chartered Institute of Legal Executives, says while change is needed, it needs to be done in an even handed way so that it does not discourage people from becoming landlords in the first place.
CILEx reveals that 76% of its members surveyed believe that landlords are treated more favourably than leaseholders under the current regime but it says this down not mean that there should be a one size fits all approach which would unrealistically group together various land arrangements with differing rights and interests to consider.
The report also says that enfranchisement reforms must take into consideration concurrent reforms within the leasehold and wider housing sector to ensure reforms are dovetailed together and that leaseholders of houses should have the right to longer lease extensions as the current 50 year period is no longer fit for purpose.
It adds that landlord rights to repossession for the purposes of redevelopment should be limited to the end portion of a lease, and supplemented with a mandatory notice period that provides sufficient time for leaseholders to reorganise their affairs.
It also suggests that the concurrent jurisdiction of both the tribunal and county courts to deal with enfranchisement related disputes should be reformed as it has led to added costs, time delays and exploitation of legal process while a single valuation expert would be useful in solving valuation disputes outside of the tribunal.
‘Our members showed caution against grouping landlords together into one overarching category, overlooking the existence of individual landlords and small to medium sized enterprises who do not pose the same risks as their larger counterparts,’ says the response report.
‘CILEx stresses that along with recognising these nuances within the leasehold sector, and the disparate nature of different landlords; it is imperative that reforms do not unjustifiably shift the balance of favour onto leaseholders without due regard towards landlord interests,’ it points out.
Indeed, some members were concerned that, if this were to happen, there would be a risk of removing all incentives for becoming a landlord, which in turn could have major repercussions on the housing market and wider leasehold sector.
CILEx argues that reform should not limit the freedom of parties to negotiate the terms of their enfranchisement in a bid to solve the underlying inequalities of arms between landlords and leaseholders, and eagerly awaits reforms to home buying and selling along with unfair terms in residential leasehold to remedy this matter.
The response highlighted the importance of improving consumer awareness of costs and processes within the enfranchisement regime, and providing clearer information to frontline practitioners on how the multitude of ongoing leasehold reforms shall interact and be prioritised.
‘We acknowledge the efforts of different agencies, including the Law Commission, to address the concern that leaseholders are at a disadvantage in the current system, but reform must not be piecemeal or fragmented,’ said Philip Sherwood, CILEx president.
‘The Law Commission consultation represents a good start to levelling the playing field and ensuring that leaseholders can assert their rights against unfair landlords,’ he added.