The government is consulting on how to set the deferment and capitalisation rates that will be used to price freehold purchases, lease extensions and ground rent buy-outs under the Leasehold and Freehold Reform Act 2024.
Key facts
- Who: Leaseholders in England and Wales who may want to buy their freehold, extend their lease or buy out their ground rent
- From: Consultation stage; the rates have not yet been prescribed
- Source: Leasehold enfranchisement valuation rates
The consultation, titled "Leasehold enfranchisement valuation rates", seeks views on prescribing the valuation rates used in enfranchisement claims under the Leasehold and Freehold Reform Act 2024.
Background
The Leasehold and Freehold Reform Act 2024 (LFRA 2024) will make several significant changes to the current statutory enfranchisement processes. These are the routes through which leaseholders can buy the freehold of their property or extend their lease in England and Wales.
The Act will set a Standard Valuation Method. This is the method for calculating how much the leaseholder must pay to buy the freehold, extend the lease or buy out the ground rent.
What the consultation covers
The Act also gives the Secretary of State new powers to prescribe the deferment rates and capitalisation rates used in calculating the price paid for enfranchisement. The consultation asks for views on using those powers to set the rates. It also poses questions about different approaches to setting them.
The government is also running a separate consultation on leasehold enfranchisement process costs exceptions.
The Leasehold Advisory Service has published information for leaseholders on understanding the consultation and how to respond.
What this means for leaseholders
The deferment and capitalisation rates feed into the price calculation for enfranchisement. The outcome of the consultation may therefore matter to leaseholders who expect to buy a freehold, extend a lease or buy out a ground rent. The consultation asks for views on how those rates should be set, and leaseholders can take part.
The Leasehold Advisory Service information is a starting point for understanding the consultation and how to respond. Check the consultation itself for how and when to submit a response.
Anyone with an enfranchisement claim in prospect, or a deadline running in an existing matter, should get legal advice on their own position before any deadline passes.
Sources
- Leasehold enfranchisement valuation rates, GOV.UK consultation: https://www.gov.uk/government/consultations/leasehold-enfranchisement-valuation-rates