Leasehold and Freehold Reform Bill – really helpful rule applying to houses in potentially reducing the premium will be removed.

Aside from the main changes already reported on the proposed legislation in this blog, one subtle change will be the removal of s3(3) of the Leasehold Reform Act 1967 applying to houses..

This allows a tenant to go back to the beginning of prior leases (assuming each prior lease was a long lease originally of over 21 years and the name of the tenant at the end of the prior lease is identically the same as that as the subsequent lease) as if it was a single tenancy. ThisĀ  effectively values the house as to its condition, layout and size as at the grant of an earlier lease as at the valuation date.

By making this change, the rule for houses will be the same is it is for flats where one can look no further back than the beginning of the current lease when assessing the value of a tenant (and his/her predecessor in title’s) lasting improvements.

Although this involved considerable detective work in searching through past archives of former leases, drainage plans and licences to alter – the saving could be tremendous.

I well recall settling a freehold claim for a house in Belgrave Sq at approximately 2/3’s its gross internal area as at the valuation date as I managed to prove that a prior lessee of an earlier lease had indeed vastly enhanced the building at his expense going right back to the mid 1800’s. The resulting premium reduced substantially as a result.