Updating post from Reddit.
The article refferenced above: Outright ban on new leasehold flats moves closer.
I welcome it with open arms.
I'm from a country where leasehold doesn't exist, and the mere thought boggles the mind. How in the everliving fuck did the British let themselves be swindled into leaseholds even existing? It's so obviously a scam it hurts.
Honestly? Britain hasn't had any good revolutions where property and debt records have been expunged, so there are ownership rights going back to 1066.
This enables systems such as lease holds to persist.
It's a holdover from pre-industrialisation
*feudalism
Last time I checked, feudalism was pre-industrialisation.
Though it's better to use the correct terms when possible and I wasn't sure off the top of my head if it was feudalism or serfdom.
Serfs were a feature of feudalism.
We’re not disagreeing: I just wanted to highlight that there were factors in addition to industrialisation that motivated feudalism to distort itself into its current form.
Its not quite right that... trust me I am boring with tenure...
Its was actually a way for a Landlord to dodge property tax... they would rent a field to a farmer for £1 essentially relinquishing the Landlord control over the title meaning he didn't have to pay tax on the field.
Feudalism was slightly different. On top of the Leasehold feudalism would mean the Landlord takes a % of whatever the farmer grows on the field as well. They were used in combination that's why I think people get them confused.
*to dodge property tax while keeping their vampiric claws sunk in.
All analogies are imperfect. Leasehold landlords also don’t own peasants as chattels of the land, if that’s important to highlight. Nevertheless, the British preponderance to rentiership has unbroken lineage from feudalism with no particular reason (beyond vested interest to maintain unjustifiable concentrations of wealth) schemes like this were allowed to persist.
To continue your line of quibble: how much revenue do you expect a resident to generate from their home? Any percentage of zero is zero.
>To continue your line of quibble: how much revenue do you expect a resident to generate from their home? Any percentage of zero is zero.
Its wasn't on homes originally it was farming fields feudalism - the feudalism was the landlord taking a % of their crops for example.
Leasehold is actually prevalent throughout the world. It is simply renting. You can't ever ban it entirely or else how would commercial lettings work. A business doesn't want to have to buy a commercial unit for their business if they have just set up.
It has other uses as well, its not the leasehold tenure the problem its that people have taken the piss with the rules - which is something only come about in the last 20 years ish.
Feudalism. Also prepare for feudalism 2.0 if Thiel et Al. Get their way.
Thiel. Techo-feudalism: it's where we're heading, as far as I can tell.
Yeah, I look forward to ChatGPT being my manager.
The last house I lived in was freehold but the garden was leasehold at £5.50 a year. You just paid a solicitor ever january and that was it, no other contact or anything. You had the right to buy the lease at a certain price but it wasnt worth it with the legal costs. There were 1000s of houses with the same lease built in late 1940s. Someone somewhere had a nice little earner 😀
I think it's called a peppercorn fee
Yes. It stops the freeholder losing his ownership which he would if it was occupied without any rent paid for 13 years I think.
Peppercorn rent is literally a peppercorn. It's on my leasehold and didn't stop some company trying to chase me for years of back rent at 200 pound a year. Thankfully my solicitor was so enraged he sent a letter telling them to fuck off for no charge.
When the front bench of your government is full of people who are landlords on the side these things are more likely to happen.
All apartment buildings have some sort of leasehold afaik.
Germany has the hausgeld for example.
First flat I bought I had to pay a fee to the local church. Just because.
Chancel charge that rather than leasehold - you can get a chancel charge on freehold as well. It was basically your tithe to upkeep the village church way back when
You ever rented a house? Thats leasehold.
it's a pitfall tbh. Its relatively common over here in germany, and it ends in SO. MUCH. DEADLOCK. Nothing gets done.
Leasehold has been a fucking disaster, most buildings service charges have doubled in the last 10 years, far outpacing inflation, and freeholders have routinely took the absolute piss on any costs they can.
Nothing will change. Scotland doesn't have leasehold and has had the same increases.
Building maintenance has gone up. Building insurance has shot up.
Leasehold, commonhold, whatever you call it won't change that.
>Scotland doesn't have leasehold and has had the same increases.
It's not required to have block insurance or a building management company. We self factor and insure our properties individually. We pay £20 a month into a sinking fund to cover things like roof inspections and regular maintenance and split the cost of anything more substantial.
Prices are going up for everything. The difference between Scotland and leasehold properties in England is that with non-leasehold properties, if fees themselves shoot up unfairly, property owners can change (fire) the management company. As someone who's owned both, I wouldn't touch leasehold with a barge pole ever again.
Factoring in Scotland is a fraction of the price of service charges in England, and if you don't think you are getting value you just change factors. It is crazy they haven't done it already.
Mine has doubled in less than 2 years. I’m getting bent over and the building is an absolute state. Scared of thinking about the resale value in a few years if nothing changes
Right to Manage, there's companies that can help you with the process.
Mine has doubled in the last 8 years with a residents’ management company in place because of the new fire regulations. It’s not just because of greedy freeholders.
On the whole common hold will not address the cost of maintaining blocks of flats. Lots of people are going to be either disappointed or living in badly maintained properties. It will address ground rent, lease extensions and some other negative aspects of the leasehold system
You can thank Grenfell for that.
Kingspan & the other cladding companies.
A disgrace.
Can confirm, it’s a complete piss take and it looks as if the management company that was working my building was in cahoots with the freeholder to be generating revenue from the non negotiable ever increasing fees. In addition to the increasing bi-annual charge, random excess fees in the several hundreds of pounds would randomly appear with 14 day pay notices which could result in fines and further administrative fees.
Leasehold is turning into a complete racket.
Turning into? It was designed as a complete racket, centuries ago, when it was called “feudalism”.
Service charge has nothing to do with ground rent or leasehold. You can get a service charge on both tenures
Service charge has nothing to do with ground rent or leasehold. You can get a service charge on both tenures
EXCELLENT. I grew up in Spain, where the concept of leasehold does not exist. Every neighbour owns a tiny % of the land the building sits on. Aside from the obvious scam of losing your house once the lease runs out, self management is far better. There are regular "community" (flat owners) meetings, presidency of the community changes every 1 or 2 years, and the only people exempt from holding the presidency are those who don't pay their communal bills, or owners who don't live there. Management companies are much smaller than in the UK, and it's usually just a small firm who stays on top of new regulation, renewing the building insurance, and goes to tender when repairs are needed. If out of 50 owners, only 5 show up at the meetings, those will be the one voting on what is fixed/how/the contractor to use/etc. So people make sure to attend meetings and stay informed.
Is it more work than just letting the management company do everything? Sure. Does it mean that people know their neighbours, are involved in the running of the building, and overall are happier with the state of affairs? Yep. Also, needless to say, their communal bills are insignificant compared to what we pay in the UK.
Hear hear. Same in other countries as well. The UK system is medieval
There is more than one system in the UK - Scotland does not have leasehold.
Lots of comments in this post about how this could never work and how it will be a disaster. But this right here is the answer: 'commonhold' in some form or another is done in other places and it works well.
Two real or imagined examples of how someone somewhere in Scotland didn't repair a roof or didn't pay for a few months don't change anything. You would be surprised, but it turns out most people are 'normal' people. Most people pay. Most people want their roof repaired. Those on the ground floor don't care about the lift and shouldn't be charged (unless there's underground parking, very common in Spain). Etc.
If someone doesn't pay, you can (or should be able to) sell their flat to get the money owed (yes, this is how it works in Spain too).
Such defeatist comments, right? Like everyone is incapable of looking after their own interests, while someone who has never set foot in the building can somehow muster just enough energy to half-ass its management, purely because they're being paid to do so?
I live in Scotland. The owner of the flat above ours died just before an expensive and complex set of repairs were needed. His estate was messy and complex and took 4 years (so far) to sort out.
It's not an ideal situation but somehow we and the other 9 owners have survived.
That would still have been an issue with traditional leasehold instead of commonhold. Sometimes shit just happens.
Yes, but it does demonstrate that the not-leasehold model of shared interest is entirely workable.
When we lived in Scotland there was a feud between two of the owners. One wouldn't pay his share when it came to repairs and so we had to take him to court. Really tedious process. Shared responsibility only works when people are reasonable and inevitably, you always get someone who isn't.
And we wouldn't have had Aquí No Hay Quien Viva if leasehold existed :D
I see you are a man of culture.
there would still need to be some sort of enforcement, if an leaseholder refuses to contribute then legal action would need to be taken to chase the debts.
Sadly you cannot sue a leaseholder for 10% of share of their property. The commonholders will need liquidity and that will inevitably lead to leaseholder being sued and home repossessed and auctions to cover the costs.
I do think there needs to be legislation on how servicing is tendered on leasehold buildings. I suspect the freeholders will ususally asign services to another company that is owned by the same parent company. So they can mark up the prices and make it look like they are just passing down the "costs".
For those existing leaseholds which is not covered by the change in legislation. The leaseholders who live on the property should have ultimate say on who the faciltiies management is tendered to.
I would avoid buying a property as a leasehold and
I would also avoid buying a property as common hold.
The problems are different.
The new problem for common hold is the quality of the management team who would on the owners. Imagine a mixture of social housing, uninterested landlords, poor owners, they are not going to agree.
Additionally the lack of independence means that some difficult choices of property management will not be undertaken. Quite simply because the owners wouldn’t want to pay, because I don’t have a roof lol.
There would also be a minority who would never pay the management charges and higher costs for everyone else.
Some commonholds will become ghettos.
Buildings under commonhold still hire management companies, generally at a far lower cost than the freeholders management company because they're not trying to bleed the leaseholders dry.
My building has enough signatures for Right to Manage, we've found a management company that'll save us about a third of our service charge.
That’s great but the management costs are still enormous and the property is still a liability. insurance costs will still remain high.
You are arguing against flats in general then though. Unless the building has a single owner, there will always be some sort of management company, and insurance even then.
Yes. Both arrangements have different problems because it’s flats/
Wait until they get appointed. The savings will disappear faster than a snowball in the microwave.
> Some commonholds will become ghettos.
That's universally true, though. Anywhere can be a ghetto.
My experience with common holds is that if you buy a shithole, you get to live in a shithole. If you buy a nice place, you'll find your neighbours are invested in maintaining it, if nothing else because they hold a substantial financial stake in the building.
Plus you can have a management company. I don't on any of mine, but some family members do, and it's far less of a ball squeeze than leaseholds.
Same as moving into a crappy neighbourhood versus a good one.
This is a good point..and an advantage of living in communal blocks ., IF you live in a good block with good neighbours then EVERYONE is working together collectively to maintain and improve the shared areas. Can be the opposite in a crappy block with crappy neighbours.
They already do this in Scotland
It profoundly misunderstands the problem
If it costs £100k to repair the elevator it costs that.
If it costs £1mn to insure the building, it costs that
There doesn't seem to be a plan for when the residents council votes not to repair something, and someone dies.
>There doesn't seem to be a plan for when the residents council votes not to repair something
If I own a home and decide not to fix something it remains broken.
Now, If I own a commonhold flat and we vote not to fix something it remains broken.
The plan is, no greedy investment firms adding markup to costs, with no incentive to get best value, eager to increase unnecessary costs to raise invoices and collect ground rent for nothing. With little to no accountability to the owners.
“We”, agreed not to pay and the roof failed. The flat is not mortgageable. lol. Take a look at Scotland.
Do you believe that flat owners require babysitting by investment funds, but not those who own terrace homes? A failed, leaking roof would render their property, as well as their neighbours', unmortgageable in both examples.
Yes, if you want to put it that way.
It’s a type of principle/agent problem.
Absolutely, what happens when the one woman in a wheelchair wants the lift fixing but the other 9 flat owners don't want to fix the lift?
My mother owned a one room flat in a block in Italy, the constant arguments about what should be fixed and who should pay was so draining. She just sold up, someone in the building has two flats and wanted to give the property management to a friend who has a property management company. It was all a shit show.
Honestly never buy a leasehold or this new equivalent.
>She just sold up
And presumably moved to a place where the lifts were maintained properly? That makes sense.
The same as it is now, either covince the management or use regulations to her benefit to force the issue. The only difference is she has a voice in the management, before she had none.
"Now, If I own a commonhold flat and we vote not to fix something it remains broken."
Thats probably going to get hammered by disability legislation
"The plan is, no greedy investment firms adding markup to costs, with no incentive to get best value, eager to increase unnecessary costs to raise invoices and collect ground rent for nothing."
Did you see the "profoundly misunderstands the problem" comment
There are no secret cabals of the rich getting fat on the poor downtrodden.
As an experienced leaseholder and a block manager, I dismissed the comment due to learned experience. Leasehold on new properties being banned in well overdue, we can only hope they fix enfranchisement so we can put leasehold in the history books.
Your proposition that homeowners need mothering because they own a flat was put forward by the freehold managers' associations and rightfully dismissed as nonsense.
> There are no secret cabals of the rich getting fat on the poor downtrodden.
I mean this is just plainly false. There was an epidemic of management companies getting massive commissions on sales of building insurance as a kickback for example, which was the reason behind the last leasehold legislation bill. You can read the research done as part of that which has some quite blunt statistics exactly on that point.
Yes, sometimes there are big underestimations of exactly what things cost on the part of leaseholders to run a large building (especially on some things like concierge staff/insurance/lift maintenance). But let's not pretend building management companies in large buildings are not taking advantage of residents in many cases.
"There are no secret cabals of the rich getting fat on the poor downtrodden."
"There was an epidemic of management companies getting massive commissions on sales of building insurance as a kickback for example,"
I realise you think you refuted my point, but you didn't
These two things are true, management companies are funded, stupidly, but that doesn't mean they are making fat stacks unjustly.
All removing the "kickbacks" would do is see management charges balloon, the money is going in to managing the property, not Scrooge McDuckian vaults
Its like saying we should cancel taxation but keep the free NHS.
There is a massive problem in leaseholds, especially flats, this doesn't solve it. It undoubtedly makes it worse.
I think you misunderstand what "kickbacks" are. It's corruption, not some discount on management fees XD
Kickbacks in this case is money the management company receives from other companies in order to persuade them to give them contracts, despite their tender being worse value. The management company then foists the inflated costs on the leaseholders, and makes even more money on their "administration fees" as a percentage of the total costs.
Do you understand better now why the above comment was indeed a refutation of your point?
I guess we want to willfully believe in capitalism and despite the government enquiry finding out that these kickbacks were sometimes up to 60% of the premium that the management company is acting in everyone's best interest and is only making a slim profit margin.
And that they definitely aren't just pocketing that money which is invisible to the actual leaseholders because it wouldn't show in the accounts.
I'm sure the account show the management company generously spending more on management than they bring in, because of the kickback!
I think I did actually. You're now making the assertion that those kickbacks would mean that otherwise the management company would charge more.
That isn't the case - they don't show on the accounts given to leaseholders, they only see the inflated cost of insurance premiums and the company pockets a big cheque. This was so much of a problem the government had to pass the reform bill.
The problem is precisely that money isn't going into managing the property.
There was undoubtedly a problem with unreasonable commissions being charged. Mainly by freeholders. Most agents work on a margin of around 10 to 15 % of total income earnt. Including insurance commissions. Fees will absolutely go up as a result of a ban on commissions. Without a doubt, they will have to. And unfortunately leaseholders will be paying 20% VAT on those fees instead of 12% insurance premium tax. Overall I expect leaseholders to pay more on average across the sector.
That's bullshit, management companies have 0 skin in the game to keep up quality service
Apart from losing business.
The complexity scales exponentially depending on how big the development is. It's easy to talk in terms of repairing a leaking roof for a block of 4 or 8 flats, but what about when you are talking about problems with an industrial plant room providing hot water to hundreds of flats?
What about paying for FRA works or all the other countless regulatory considerations there are for a big block? How do you even set up the decision making apparatus when you have 100s of leaseholders and most don't even bother replying to emails let alone attending AGMs?
It's not really fair to compare managing a terraced house to shared management of a big block, at least for the people actually doing the managing. You need to hire lawyers and accountants, pay a managing agent to handle repairs and maintenance, commision surveys and reports to ensure you're compliant with regulations, and then if there are any major structural issues which in many cases can run into the millions, you have to potentially coordinate legal action and major construction work that will impact hundreds of people to get it fixed.
All this to say that managing a big, complex development as an RTM is no joke, and it is unrealistic to think that every development will have leaseholders who are up to the task or even have enough time to do it properly.
Genuine question here, but how does the rest of the world manage this?
I can see your point that it's far more work in big blocks, so how is this managed in comparable European countries that don't have a leasehold system in the same way we do?
In France it is known as a co-propriété - that is, each owner of each flat is also the owner of the common areas of the building (entrance hall, lift, staircase, roof, façade, courtyard...). This is expressed as a percentage based on the size of the flat that is owned, so someone who owns a 3 bedroom flat will "own" a larger percentage of the common areas than someone who owns a studio flat in the same building.
This means that the 3 bedroom flat owner will pay more towards the general upkeep of the building, but their vote will also be proportionally worth more when deciding what needs to be done.
Once a year a meeting is held and all the owners vote on what needs to be done, what companies should be contracted to do it, what the yearly budget should be, and many other things. This is generally managed by a company (chosen by the home owners, and at these yearly meetings a vote is held whether to keep using the company or change it, which in theory should incentivise it to do a good job).
In practise, results vary. Some people are very satisfied with how things are run, others not, but at least the fairness of the voting system, which is set by law, means that at least everyone gets a say.
>The plan is, no greedy investment firms adding markup to costs, with no incentive to get best value, eager to increase unnecessary costs to raise invoices and collect ground rent for nothing. With little to no accountability to the owners.
Think you may quickly find out that nothing has changed there.
Ground rents are current prohibited to £0 on new builds. This legislation is only going to be on new builds after it comes into play.
They can put an estate charge on a freehold anyway.
They can vote not to repair the elevator and use only the stairs.
Did you know that freeholders would get a share of the insurance broker commission? Do you think this incentives them to choose the best value for money? I choose, I get a kickback, but you pay...
Commonhold puts a stop to this.
Yet plenty of other countries manage to do this without buildings collapsing around them
I’m so glad I’m not the only person on here thinking this. I was starting to go crazy reading all the comments about how it’s going to make everything better.
Our block formed an RTM several years ago, and now instead of a crooked managing agents mismanaging the building and taking kickbacks we've got a crooked RTM director doing it. Of the 150 or so leaseholders about 30 ever play any part in the management of the building. We can't even get enough of them to commit to attending an AGM to remove our rogue director and appoint new directors. Managing a block yourself with 4 other flats is one thing, managing a block with 200 flats is completely different.
Spot on. I manage the company for a 4 flat common hold (although legally we are leasehold, the four flats hold all the shares and ownership of the lease) and whilst not always perfect there hasn’t anything that I couldn’t sort out amicably. One of my drinking buddies has the same arrangement in a block of 20 and calls it a nightmare.
I do this too. For a block of 8 in London. It takes me about 5hrs per year to manage! I just pay an accountant to do the companies house/ yearly accounts for the ltd company who owns the freehold ( of which I am a director along with 4 other of our leasee’s )
Leasehold ownership/ shared ownership should be out right illegal. It’s criminal that people are being conned into life long rental for something they are supposed to own
only for new builds. not existing
Must have been lucky to have bought a flat in 2017 in the UK as common hold. It’s been difficult sometimes as issues are collective responsibility and not everyone pulls their weight, however, not getting f’d over is obviously a big plus, and I’d do it again if I had the option between lease and common.
They should also either change existing leaseholds or give much heavier penalties for bad management companies.
And complete transparency about where the money goes and how it’s spent.
Leasehold doesn’t not exist in mainland Europe, at least the part I'm from. Time to end this leeching practice.
About bloody time. Leasehold has been abused to fuckery, this is why we can't have nice things.
Anyone who owns even a portion of something should have a portion of control as well. Obviously.
Is this just for new builds or will it impact current leaseholds?
New builds
Would this not absolutely tank the value of existing flats then?
Probably not due to supply and demand.
The won't build enough of the new free hols ones to replace the supply
Great! Let’s make it happen, Captain!
It's common in Scotland
Leasehold is truly terrible. Another way for the wealthy to leech off of poorer people.
Just one resident needs to disagree with repairs to the common parts, and then the whole building falls into disrepair and the units become unsellable.
Not if they are out-voted, surely? If out of ten owners, nine want repairs and one doesn't, then the repairs would go ahead.
You would think that it would be that easy, but in practice it just isn't that easy to get enough reasonable people together to make it work.
Nine out of ten might vote for repairs, but then people will object to colour, quality, pattern, cost - absolutely everything.
I briefly lived in a flat where the management company was replaced by a committee of tenants who were to organise repairs to the common parts, and nothing got done due to the sheer volume of arguments and protests by individuals who wanted it all done their way.
It was a total nightmare. We sold the flat cheap to get out of the chaos. I'd never willingly buy a flat again.
Well, it is (legally) easy when it comes down to votes. Of course, such a system needs to be backed by the law.
Firstly, this does not negate the fact that it makes ZERO sense, besides it being remnant of feudal systems from century+ ago, for leaseholds to exist. Flat owners should share the ownership of the land and the building, not a third party. Then the purchase should be forever, not for a prescribed number of years.
Secondly, yes this is a problem that needs addressing via legislation. Something akin to a homeowners' association. If you couldn't get out of paying your ground rent and maintenance charges as an owner of a leasehold flat, then I see no reason why you should as an owner of a commonhold flat. It just gives you voting rights over what is done, when, and at what cost.
Imagine spending 3k on standardised paperwork during a property sale and thinking that's okay.
L.Hold Man Cos (and Man Cos in general) can be found under the dictionary term "parasite".
Few people will want to actually actively manage their own building outside of a 25yr old Labour Spad & part-time staffer at Shelter.
So external directors will have to be employed at a cost, as will the PI insurance & other services - none of which will confer the economies of scale a larger freeholder could leverage.
The main problems are:
- cheaper ‘fixed fee’ conveyancers.
- uncapped ground rents
- mushrooming service charges.
The latter 2x (plus our inertial services inflation!) all get fixed by legislating to insert a CPI+1% cap into all consumer contract increases.
The cheap-ass conveyancers should be opened to being sued compensation by poorly advised current leaseholders. Govt can chip into the pot to help if it wants. It’ll be cheaper than a “help to commonhold” loan scheme!
I did the maths but RPI linked rente are more expensive than doubling clauses :)
Like everywhere else in the world? Sounds like, a reasonable step towards getting out of feudal times.
Just because they do not call it a "leasehold" doesn't mean they don't have something similar.
Singpore they have 99 year leases.
America you can be tied to a housing associations.
Denmark have andelsbolig
Most countries in Europe don't, there are more examples that don't than the ones that do.
Do they not rent in Germany? France? Greece? Italy?
Thats all that leasehold is.
Obviously that is not what the post is about nor what everyone is talking about.
In those countries if you buy a flat, it's yours fully, forever. You own the respective portion of the building and land where your flat sits.
No one is talking about the UK getting rid of renting, that's a bad faith argument.
But that is Leasehold Tenure. The problem is people have taken the piss.
Works fine in the commercial world - Asking Rent £10k - but you pay a premium up front of say £30,000 - and the rent reduces to £5k - you don't get possession after your term ends. This is why it works in Singapore on resi - they will pay say £10k upfront for a 99 year lease and pay £50pcm instead of £500pcm.
If we utilised Leasehold like that its fine. The problem is people don't understand tenure, when they were buying leasehold they were under the impression its just like buying FH hence paid 100% MV for it.
If I offered a 2 bed flat in central London for £40,000 - but you pay a fixed rent of £100pcm for 30years that would be a good deal for someone. And the interest still has value, say you did 10 years there and wanted to move, 100% market rents have gone from £1,000pcm to £2,600pcm - I reckon I could find somebody to pay me £45,000 up front to have the lease assigned to them so they only pay the £100pcm - as over the remaining 20 years they will save at least £600k for a £45k investment.
There is little difference between a Freehold Interest and a Leasehold interest, you can put the same restrictions and benefits in both so Freehold can be as bad as some peoples Leasehold (restrictive covenants, estate charge, disposition, charge).
We don't need to complicate shit by banning leasehold just prohibit onerous clauses... or better still get the solicitor to do their damn job.
Arguing in favour of families only being able to buy their home for limited time, therefore limiting their wealth and generational wealth, because someone owns the land where the house lives is not just a horrible way to build a society, but also just evil.
The most landlord argument in the world: others should not be landlords. Great take.
So you do understand you do not own the freehold either?
You cannot "own" property or land in the UK unless you are the king (who owns everything). You hold a registered interest that conveys rights and burdens.
So back to my example have two choices:
- Rent on an AST for 30 years at £2500pcm - £30,000pa - Total over the term £900,000
- Long Lease 30 years - Premium of £40,000 - £100pcm - £1,200p.a. Total Term: £76,000
The problem is like I said people didn't understand what they were buying.
Simply put people should have been given a discount on buying a leasehold but they didn't valuers and buyers treated them like they were a different tenure
Right, so your argument is that even with the proposed changes, we still would be in feudal times? Okey, you may be correct, that is fine.
My point was just that this is medieval and that the rest of the civilized world doesn't do it, you just keep making my point stronger, I think.
The rest of the world may not call it leasehold but they have it; strata, pastoral, state fee simple. But they have done one thing we haven't banned perpetuaties.
My point is Leasehold is perfectly fine and useful and its only the terms that people get angry at.
Leaseholds are absolutely fucking bizarre and should be abolished immediately
I don’t see how it will make much of a difference. Service charges are shooting up mainly due to fire safety. Therefore, what does it matter if its lease or common hold, the fire safety works are the fire safety works and the laws around the inspections and testing stay the same. They still need to be carried out and paid for. I think some leaseholders will have a nasty shock if this happens and their service charge is still high because lease vs common hold isn’t the issue here.
But this won’t be for the 5 million existing leasehold properties?? Right? The current government legislation is for any NEW properties to be commonhold. So all existing leasehold properties will remain as leasehold properties after the new legislation has passed. Someone please correct me if I’m wrong.
This will just move builders to never sell and only rent. Recently we had a large flat complex built in Oxford (near Botley) and it is rental only - you cannot buy a flat in the complex as far as I know.
What's the problem with that?
Not saying it's a problem per se, more that people will have less and less options to buy.
On the one hand, you don't have to worry about renewing the lease from someone else... But on the other hand, if you don't have a good residents association it can be an absolute fucker. I currently share the lease in my building and we have a really good residents association who get shit done.
I have, however, lived in one place where they used a management company, and the company made the residents elect 2 representatives to make important decisions. The place was going to shit because the company were hiring cowboys, didn't take out complaints seriously, and the reps kept refusing work.
Another situation I know of is a friend who is the elected manager of the building, and she cannot keep the other residents in check. They are doing all sorts of bullshit without raising it beforehand and are blaming her when things go wrong.
While I approve of the direction this is going in, I am expecting a lot of shit shows to emerge.
Why has it taken so long. A Civil Service friend was working on this more than a decade ago!!
It's a solid improvement but it must be applied for existing leaseholds, not just new ones.
Too little too late. Leasehold should have been abolished back in the times slavery and feudal land tenure existed... so it is just like 200-300 years late to abolish this abomination of the system.
And just to be clear - this is NOT normal to have leashold system. It only exists in UK and some of former colonies. So the proper way to fix this is to completely abolish it, on new, old and on all residential properties.
Maybe for commercial property it is okey, but should be outright banned and abolished for all residential.
Hope the detail is solid and there is a follow up on conversion of current schemes.
Much love, Q
Ah good revolution eh, well what was the Commonwealth of Cromwell other than a revolution? However despite that, the power of the wealthy stayed in place because the British seem to prefer the status quo, hence the pressure to anoint a new King after only 10 years of rule by the Lord Protector and Parliament. Leasehold served a purpose. Up to the 1920s, landlords or freeholders held a dominant position over their tenants. Legislation was introduced to regulate rent and restrict landlords from recklessly evicting tenants. Tenures were gradually enfranchised and turned into either freeholds or leaseholds. From 1926, all remaining Copyhold land became freehold tenures. As profits declined, landlords began offering longer leases (around 99 to 125 years) to generate revenue without losing ownership of their land, which gave way to the modern leasehold system we recognise today and are ditching. Freehold tenure was not possible for occupants living in a block of flats because the apartments sit on a shared plot of land. According to the law, a freehold is a right to own land with a distinct boundary on a map. There was a rapid increase in leaseholds at this time, as they were the only way to subdivide and sell properties in multi-occupancy buildings. Today, leasehold remains the most common method of owning a flat. It what comes next? https://theleaseextensioncompany.com/the-history-of-leaseholds-and-property-ownership-in-the-uk/
It's the norm in France.
Better but will still be open to exploitation, particularly with growing trend of build-to-rent. You can look at how this has functioned on council estates. Share of freehold isn't uncommon
A block where a single entity owns 51%+ of the units in a block, will defacto still have leaseholder/freeholder relationship. Rules around maximum ownership by a single entity should be enforced- I believe in USA this is how their co-operative owned housing works.
What would happen with existing leaseholds? Could it lead to disputes between flats about building maintenance?
A long time coming! It should apply to houses too. Developers have been taking the P for far too long.
Could someone explain this to me like I'm 5?
Very interesting reading the feedback from our friends overseas. Commonhold is often criticised as unworkable but most of the rest of world seems to have a working system along similar lines. I've written a post recently on whether commonhold will replace leasehold and how this might happen
Knowing what the government are like I have a suspicion this is going to do more harm than good for a few reasons as currently for new builds:
- Leasehold is limited to £peppercorn and obviously might as well be 999 year term
- They removed the ability for the FH to gain possession.
- any restrictive covenant can be added to either LH or FH
- Unless provisions are added its not going to stop a service charge from being paid
- if they do the latter you can still get a estate charge on a FH title anyway
So for anything bought new its not really going to matter; so any benefit is going to be if they implement it on retrospective leases to free people from doubling GRs and marriage value reversion. But looks like they aren't sure how to do that.
The major issue if they change all leasehold to commonhold is the setup costs are going to be horendus... the land registry is backed up as is never 1,000,000 commonholds needing registering. They will also need to think about compensation to freeholders.
Theres also wider reaching potential issues. As a developer when I go tie up a deal on a farm to potentially develop in future I use a leasehold interest to ensure its contracted to me... the government could quite easily add a legislation clause that could make those unenforceable.
This is literally 'condominium' — the system used for apartments all over the USA. It's just been given a social democratic rebrand.
There are two entirely separate issues here and it's important to keep them separate:
a) The issue to do with land ownership by a separate third party, ground rents, and the finite duration of this effective land rental (and issues to do with the nature of the terms these contracts/leaders sometimes include).
b) the issue of how common areas of land/buildings/blocks are managed - no matter what we call it - leasehold, commonhold or whatever - there's always going to have to be some mechanism for managing and maintaining such property and land. And they are going to have to be contractual obligations involved, obligations to pay, and penalties for non-cooperation. People are always going to have to be involved in this whether and external person or otherwise.
I agree that (a) is not a desirable system and it is desirable that it is ended. However a lot of the problems which have arisen in leasehold properties are in area (b) and these can arise equally in other forms of management (serious problems often arise in so-called share of freehold situations which is not that far distant to commonhold). There has been massive reluctance over many years to deal with these issues not all of which involve external freeholders (take a read of ftt tribunal judgments to get an impression of what these problems are).
Simply converting the management system to some form of common hold without dealing with the many problems which have arisen in (b) may not help nearly as much as people imagine.