The Commonhold and Leasehold Reform Act 2002

The last Leasehold Reform Act

In 1998 the Government began consultation on the seventeenth Leasehold Reform Act.

The following sections are reproduced exactly from Government papers

(i) ‘Ministerial Foreword’ to the Consultation Paper 1998

(ii) Press Release from the DETR, 1998

(iii) Government ‘Notes to Editors’ issued with the Press Release, 1998

(iv) Parliamentary Debates on the the Bill, Jan-March 2002

(i) ‘Ministerial Foreword’ Housing Minister Hilary Armstrong: (Full text, word for word – only numbering added)

The leasehold tenure is almost unique to England and Wales.
It has its roots in the feudal system and gives great powers and privileges to landowners.
It is totally unsuited to the society of the twentieth – yet alone the twenty-first – century.
Over the last thirty years, a series of reforming measures have addressed its worst features, but the result is a confusing and inconsistent patchwork which still allows abuses to flourish and causes misery and frustration to many leaseholders.
The Government believes the leasehold system is fundamentally flawed.
6. It is committed to introducing a new form of tenure for flats – commonhold – which in future will enable the individual flat-owners in a block to own and manage the whole building collectively from the outset.
We see commonhold as the best way to tackle the problems faced by many existing residential leaseholders.
However, in the meantime we still need to undertake a major overhaul of leasehold law to help the existing two million residential leaseholders in England and Wales.
This consultation paper represents a first step in that process. It is a long way from being the last.
This time, it is imperative that the legislation is thoroughly prepared and draws on the accumulated experience and expertise of all those with interests in leasehold to create a fair, workable, comprehensive and durable system of rights, obligations, and safeguards against exploitation.
Primary legislation will be required both for the introduction of commonhold and for most of the leasehold reforms proposed in the paper.
We will legislate when Parliamentary time allows. The Government cannot sort out all the problems surrounding leasehold tenure through legislation alone.
However, we intend to provide a framework which is clear and gives the basis for effective resolutions.We look forward to receiving your comments.’

Hilary Armstrong Minister of State

Jon Owen Jones, Parliamentary Under Secretary of State Department of the Environment, Transport and the Regions (Welsh Office)

(ii) Press Release from the DETR, 1998

To accompany release of Consultation Paper – summarising the present position of leaseholders, and describing new proposals. (full government text, word for word).

‘The first step in a root and branch overhaul of the leasehold system in England and Wales was taken today.

Housing Minister Hilary Armstrong launched a consultation paper proposing a fairer deal for leaseholders. Ms Armstrong said:

“The leasehold system is flawed to its roots and we are committed to reform it. Previous attempts have just been tinkering with the odd elements. They have not worked. Abuses still flourish, causing misery and frustration to many leaseholders. We want a fair, workable and durable system.
This consultation paper is the first step in the process. No firm decisions have yet been taken. Before they are, we want to know what all interested parties think.
We are committed to sustainable home ownership. We want to provide leaseholders with the security and control other home owners enjoy. We plan to strengthen leaseholders’ rights while striking a fair balance with landlords’ legitimate interests.”

Full text of the DETR Press Release, (word for word continued):

‘Proposals in the consultation paper include:

making it easier for leaseholders of flats to join together to buy the freehold;
options to cut down on arguments over the price of buying a freehold, avoiding the need for expensive professional advice;
a new right to ‘manage’ their block of flats for people who do not want to buy;
a range of options for improving management standards and controlling the activities of property managers;
options to tackle landlords who use the threat of forfeiture proceedings to intimidate leaseholders into paying unreasonable charges;
a thorough rationalisation of the existing law to help leaseholders of houses, as well as flats.
the Government also plans to introduce a new form of tenure for flats – commonhold – which enables individual flat owners in a block to own and manage the whole building collectively from the outset. The Lord Chancellor’s Department will be consulting separately on this in due course.’

(iii) Government ‘Notes to Editors’, issued with Press Release, 1998:

There are about 900,000 leaseholders of houses in England and Wales and more than one million leaseholders of flats. Leasehold tenure is almost unique to England and Wales. Despite a variety of reforms over the past 30 years, the system is widely perceived as being unfair to leaseholders and has attracted considerable criticism.
Although leaseholders have invested substantial sums of money in their homes they do not have the same degree of security and control over the running of their homes as other owner occupiers. The landlord often has a monopoly over the supply of services and maintenance, but the leaseholders have to pay the cost. There is no incentive for the landlord to provide a cost-effective service and there is evidence of widespread exploitation by unscrupulous landlords.
A leasehold is also a wasting asset. Although leaseholders may have originally paid a similar price for their home as a freehold, its value diminishes as the lease gets shorter. Mortgagees are often reluctant to grant loans where the lease has less than around 60 years to run, making the property difficult to sell.
Following earlier reforms, leaseholders have a number of rights which were intended to deal with the above problems. However, there is evidence that they are difficult and expensive to use.

The closing date for responses is Friday 12 March 1999.

(iv) Parliamentary Debate, Commonhold and Leasehold Reform Bill 2002

Mr. Adrian Sanders MP Hansard HL Deb. 24/1/2002, Standing Com. D – c. 176

‘Two groups want to retain Forfeiture: one is represented by the Government, and the Minister will explain why, and the other is the British Property Federation…. ‘ ‘Even the British Property Federation therefore recognises that forfeiture is not an appropriate modern-day property management tool’.

Shona McIsaac MP Hansard HL Deb. 24/1/2002, Standing Com. D – c. 175

‘We must stop people being harassed with the threat of losing their homes’. Lord Jacobs Hansard HL Deb. 15/4/2002, Vol. 633 – c. 711
‘..the more one reads about it and the more one listens to the Minister today, the more one realises that we are quietly putting up with a serious injustice ’.

David Lepper MP Hansard HC Deb. 8/1/2002, Vol. 377- c. 502

‘We say that we are taking our time because we want to get the legislation right, yet in may ways we have made a pig’s ear of it. We have a legislative slot however, so I ask Ministers to go the extra mile and put an end to Feudalism’.

Dr. Brian Iddon MP Hansard HC Deb. 8/1/2002, Vol. 377 – c. 503

‘Finally, I am against Leasehold. Its time is up, and we should ban it ’.

Barry Gardner MP Hansard HC Deb 8/1/2002, vol. 377- c. 476ff

‘If more than 60% of new build flats are Commonhold and Leasehold withers as Ministers predict, I will be delighted to eat my words…..
‘If even 10% of Right to Enfranchise companies succeed in effecting that transfer, I shall rejoice at my own folly for ever doubting Ministers and their Civil Servants…..
‘If only 10% of current residents associations successfully establish themselves as Right to Manage companies, I will be astounded by the Bill’s success…..
‘The fourth aim is to enable existing leaseholders to enfranchise more easily. In that respect my threshold drops lower still, to a mere 5% increase in the number of leasehold blocks that are able to enfranchise…
‘The House and the Minister will recognise that I have set exceedingly small benchmarks by which to measure its success…
‘I am confident that in perhaps six or seven years time we can begin afresh the enterprise of making radical and comprehensive reform to the laws governing property tenure in this country….
‘After all what is six or seven years between comrades, Leaseholders have been waiting since 1884?’