It is over a month since the Housing Secretary’s announcement on Leasehold Reform. We wrote are response shortly after and have been advising numerous clients, new and existing on what this means for them.
Our pithy answer is “there is great opportunity but it all depend on your personal circumstances”. The vast majority of clients already entered into negotiations have chosen to continue, but with a renewed and bolder attitude that reflects two things:
Whereas before, if a client withdrew their claim, they were bared from reapplying for a further 12 months and they were certain to pay a higher premium on account of a shorter lease, higher property values and a system that only ever leant more favourably towards freeholders.
What the January announcement has changed is that some clients are viewing the consequences of withdrawing as an option that could now have positive consequences and bring opportunity to save money.
Each case is weighed on its own merits, the client’s attitude to risk and urgency to extend but we are now pursuing a number of negotiations with clients that have set lower target for their premium, above which they will walk.
We also have engaged new clients who are engaging with their freeholders without serving notice (often called the informal route) with the simple understanding that there are risks for both sides:
There is a risk for the leaseholder to extend now under the current methodology given that in the next 4 years, they are likely to work under a model that sees them pay less.
There is a risk to the freeholder to have the leaseholder wait until the reforms come in and likely pay a lower premium.
We will see in the coming months how negotiations unfold, but it is certainly a very interesting time in the world of extension and enfranchisement and good to see all be it the potential balance of power shift in favour of leaseholders.