In a reply to a letter it sent earlier this month, minister of state Lord Greenhalgh told ALEP that the government was committed to reforming the process of valuation which leaseholders must follow to calculate the cost of extending their lease or buying their freehold.
Lord Greenhalgh said that in the second phase of its leasehold reform plans the government would, “abolish marriage value and prescribe rates for the calculation of market value” and that an online calculator would also be introduced to ensure standardisation and fairness.
The first phase of reform, the Ground Rent Act, will come into force this week (30 June 2022), and will ban ground rents on new leases of houses and flats.
ALEP said it was pleased with the reply it had received from Lord Greenhalgh.
Mark Chick, director of ALEP said: “The note makes plain that reform is likely to be tabled by way of legislation to deal with the options for reforming law as it relates to valuation and there is a new commitment to abolishing marriage value, standardising calculations and introducing an online calculator.”
“It is not an exaggeration to say that these proposals are some of the most political recommendations that the Law Commission has ever had to deal with and the government’s response to these will no doubt fit in with its intention to make the process ‘cheaper and easier’ – this will mean significant changes to the way that leasehold reform work is dealt with, particular as regards valuation.
Chick added: “How effective these will be, or whether such legislation will pass through Parliament without challenge is, of course, a separate question and I would anticipate vigorous debate around this subject.”
He added that making the statutory lease extension term 990 years rather than 90 years in addition to the existing term is likely to be capable of being dealt with by way of smaller and less contentious amendments to existing legislation.
Chick said: “There is a very good chance in my view that this change will come into effect or at least be the subject of a bill before parliament before the next election in May 2024.
“As to the wider reforms relating to valuation, these may be more contentious, although the commitment from government is there. The question on these may well be what level of support can be obtained in parliament for these, as they are debated and whether there will be any challenges to them.
“ALEP is delighted to be consulted and responded to directly in relation to the government’s proposals and continues to engage with the government on leasehold and commonhold reform. We anticipate a lively debate in the months ahead.”