Property Week quotes James Souter on a legal case relating to Annington Properties and the Leasehold and Freehold Reform Act
The Leasehold and Freehold Reform Act (LFRA) was given royal assent on 26 may 2024, a law served up in the wash-up of the previous parliament, and the legacy of the former secretary of state Michael Gove - his last act before announcing he was to step down as an MP.
The Act is now facing a legal challenge. On 19 August, Annington Properties, which is managed by Guy Hands’ private equity firm Terra Firma, launched proceedings against current housing secretary Angela Rayner over provisions in the law.
A central aim of the new law is to overhaul the valuation methodology, as well as the legal process for leaseholders wishing to extend their leases or buy their freeholds. Leases are to be extended to 990 years from the current 90. Although some minor provisions came into force in July, much of the act is still to be clarified and laid down in secondary legislation. Annington deems itself outside the scope of the act when it comes to its own activities. However, it is concerned that it may get caught up in the legislation and that its properties that serve the Ministry of Defence (MoD) could be affected.
James Souter, Partner in our Real Estate Disputes team, comments on the case in an article for Property Week:
It isn’t surprising to see Annington take this step and I would expect to see others follow suit [...] The fundamental question is whether the changes to the valuation methodology strike a fair balance between landlord and tenant. The answer to this is further clouded by the fact that we are waiting for certain prescribed rates to be set by the government that will determine the valuation outcomes.
"It isn’t clear as yet what Labour will do but there are two potential outcomes, the first being they simply implement the act that was rushed through in the wash-up, and the second that they have another look at the substance of the act and make changes.
"There is a strong hint that the Labour government might go further and seek to promote commonhold as the primary form of property ownership, but that would involve a whole new piece of legislation.
Read the full article in Property Week here (subscription required).
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