Leasehold Enfranchisement: Blessing or curse?

Leasehold Enfranchisement: Blessing or curse?
What have been the successes and failures of enfranchisement? Mark Loveday, barrister at Tanfield Chambers considers this issue, confirms the key enfranchisement cases (including Westbrook) and offers his insight concerning the future of enfranchisement.
Leasehold Enfranchisement
The term 'leasehold enfranchisement' includes rights to:

 

  • extend a residential lease, and
  • acquire the freehold

The purpose of those rights is to enable tenants to continue occupation of their residential property at a fair price and on fair terms. It also allows leaseholders to maintain capital value and the ability to mortgage.

Has enfranchisement been a blessing or a curse?

The Leasehold Reform Act 1967 (LRA 1967) is nearing its 50th birthday and the Leasehold Reform Housing and Urban Development Act 1993 (LRHUDA 1993) is old enough to have left university and qualified as a lawyer. Like all grown-up children, they can be both a blessing and a curse.

From a social point of view, the blessing has been that enfranchisement has undoubtedly extended the ‘property owning democracy’ dreamt of by successive governments. Many tens of thousands of house owners have acquired their freeholds, lessees of flats have been able to acquire secure long lease terms and groups of lessees have been able to acquire the freeholds of blocks of flats.

The curse is that in many cases, the rules have been exploited by commercial and semi-commercial developers seeking to acquire properties—often at a perceived discount to the market price. Moreover, newly enfranchised freeholders of blocks of flats may not always make good landlords.

What have been the key challenges around enfranchisement since its introduction?

The main challenges are that the law is complex, frequently inaccessible, and the valuation principles opaque. When combined with high property values, these considerations mean that leasehold enfranchisement has generated significantly more work for the higher courts and tribunals than almost any other area of property litigation.

What have been the defining cases?

There is no room for anything other than the seven House of Lords and Supreme Court cases:

  • Cadogan v Sportelli [2007] EWCA

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