BLOGS AND RESEARCH

January 2020 | Law Commission Leasehold home ownership

The Law Commission has rejected the most radical proposals for reform which included a multiplier of the Ground Rent or a percentage of the capital value. Whilst simple to implement and result in huge savings to leaseholders, the arbitrary results that it produced would be likely to result in a successful Human Rights Challenge by freeholders..a so called AP1P challenge (Article 1 of the First Protocol), which protects the right to the peaceful enjoyment of possessions.

However, they provide 15 options to reform the current valuation basis for the government to consider. The most radical known as Scheme 1, abolishes marriage value, which is likely to result in huge windfalls for leaseholders with unexpired terms at 80 years and below. Considered to have almost a 50% to a AP1P challenge.

• Scheme 2 reduces marriage value to “hope value”.
Again, large windfalls for leaseholders with unexpired terms
at 80 years and below.
• Medium to low risk of a AP1P challenge.
• Scheme 3 is basically no change to existing system at 80 years and below.
• Medium to low risk of a AP1P challenge.
• Scheme 3 is basically no change to existing system.