Fixed costs regime floated for leaseholders

A fixed costs regime and single tribunal to deal with disputes are among proposals being mooted by the Law Commission to make the home ownership process fairer, less expensive and less stressful for leaseholders.

The commission, which is looking at residential leasehold and commonhold reform as part of its latest law reform programme, was asked by the government to prioritise enfranchisement solutions.

Leaseholders are currently required to pay their landlord's 'reasonable' non-litigation costs. The commission proposes that they should either no longer be required to pay them or control the costs.

The power to determine disputes is split between the county court and the tribunal. A single claim may require multiple separate applications, The commission says disputes should be determined by a tribunal to reduce complexity and costs.

Professor Nick Hopkins, law commissioner, said: 'The current system is complex, slow and expensive, and it's failing homeowners. Many feel that they are having to pay twice to own their home. Our proposals would make it easier and cheaper to buy the freehold or extend the lease of their home, ensuring the system works for ordinary homeowners across the country. We want to hear views from across the spectrum on how this complicated area of law can be improved.'

Enfranchisement gives most leaseholders the right to purchase the freehold or to acquire an extended lease of their house or flat. However, the process has been widely criticised. According to the commission, problems include different rules for leaseholders of houses and flats, often with no logical reason for the distinction. The commission adds that the process unintentionally encourages a tactical 'gaming' approach to negotiations. Over 50 related acts of parliament, adding up to more than 450 pages, has resulted in several anomalies and unintended consequences.

Housing minister Heather Wheeler says the government is committed to banning leaseholds for almost all new-build houses. 'It's also unacceptable for leaseholders who want to buy their freehold or extend their lease to be faced with overly complicated processes and disproportionate costs,' she added.

The consultation closes on 20 November.