Leasehold reform proposals could save homeowners £1,000s - MSE News 13 January 2020 at 10:07AM edited 30 November -1 at 12:00AM in House Buying, Renting & Selling 98 replies 4.7K views

vcr

I bought my leasehold flat in 2017. I requested the previous owner extend the lease before purchasing which he did but my solicitor at the time didn't make me aware of the difference between formal and informal lease extensions, nor that the freeholder added an onerous ground rent clause to the extended lease. When I tried to sell it last summer I became aware of the issues. A deed of variation was refused by the freeholder forcing me to extend the lease again through the formal route. I had to pay for an independent valuation which came back at £3,400. I have just received the freeholder's independent valuation of £15,500, apparently based on the same calculation structure. The leasehold scandal is a very real issue affecting hundreds, if not thousands of people. The latest report from the law commission should of offered us hope and a starting point to the end of this but instead has left us all feeling like the issues we face will never be resolved by the government and that the freeholders will continue to fleece us all with no regulations.

Nlc

The National Leasehold Campaign have written a statement regarding the Law Commissions Report. It reads as follows.

Whilst we are thankful to the Law Commission for carrying out this piece of work leaseholders will not receive the content of the report as favourable.

Leaseholders have put so much time & effort into completing consultation after consultation regarding leasehold reform in the hope much needed radical changes were on the horizon. We needed the law commissions valuation report to give us hope that people will be able to afford to buy a way out of this mess. We still don’t have that.

The aim of making it easier, quicker and more affordable is no clearer than at the start of this consultation 18 months ago. The report is immensely complicated and confusing with 3 main options proposed with 7 sub options for the government to choose from. It could leave an already complicated system even more so depending on which option the government chooses or rather is persuaded to choose. I have no idea how a leaseholder will be able to understand and navigate most elements of this report.

This has been the best chance in decades to bring about meaningful much needed changes to the leasehold system, yet it appears they are doing nothing more than tinkering around the edges and keeping the status quo. It is deeply disappointing.

We can only hope that the government will take the much needed BOLD action to address the imbalance of the leasehold system. It may be correct to consider the human rights of the landlords, but they should have been considered in light of the fact those landlords have been allowed by a deeply flawed leasehold system to abuse the human rights of leaseholders over many decades. Decades in which successive governments have effectively duped the consumer into believing there were no problems with leasehold tenure. Decades in which developers have been allowed to create leases that in some cases are so onerous that people cannot sell their homes. Leases which have allowed the developers and landlords to make billions of pounds out of other people’s homes.

I would Urge ALL LEASEHOLDERS to unite together. This really is a real life David V's Goliath Battle.

PLEASE JOIN THE NATIONAL LEASEHOLD CAMPAIGN (NLC)

The NLC has over 16k members on Facebook. We also have a voice in the All Party Parliamentary Group (APPG) on Leasehold Reform & Commonhold.
This is a crucial time in our campaign for justice. Please get your MP involved. Join the NLC to see how.

worzel_gummidge

Keith_Atkinson wrote: »

Why didn't I expect anything that was truly going to help me.

The proposals from the Law Commission probably will help you if the more generous ones are implemented. Have you even read them?

The proposals suggest a much easier way to calculate the value of the freehold and also in cases where the ground rent is greater than 0.1% of the house value it will help. The process for obtaining the freehold will be easier and you won't require professional help which will save you a lot of money too. The freeholders are probably trying it on when they give you a quote. They know it is quite difficult at present for most people to force them under the law to sell so they just pick a massive number out of the air. They know most people don't know what it's worth.

The Law Commission's proposals will make it easy to calculate what it's worth. And I'd put money on it being closer to the amount you were first quoted than what you have recently been quoted. They also say they will make it easier to buy it and say you won't need a professional to help you.

If you think about it, the people who bought the freehold from the developer probably paid what it's worth and you might even get it for less than this if your ground rent is more than 0.1% of the property value.

There's also potentially some more help to you if you have been mis-sold the lease like you suggest. The Competition & Markets Authority are looking into the mis-selling claims and this could result in compensation.

I'd wait a bit unless it's urgent and see what the Government do as it's only a proposal at this stage.

Seek independent advice but also look at the title of the thread "leasehold reform proposals could save homeowners £1,000s".

worzel_gummidge

vcr wrote: »

I have just received the freeholder's independent valuation of £15,500, apparently based on the same calculation structure.

See my earlier comment but take your own advice.

[QUOTE}The latest report from the law commission should of offered us hope and a starting point to the end of this but instead has left us all feeling like the issues we face will never be resolved by the government and that the freeholders will continue to fleece us all with no regulations.[/QUOTE]

Why do you think that? The title of the thread is "leasehold reform proposals could save homeowners £1,000s"

worzel_gummidge

Nlc wrote: »

We needed the law commissions valuation report to give us hope that people will be able to afford to buy a way out of this mess. We still don’t have that.

See the title of the thread. Does that not give leaseholders hope? Does capping the ground rent at 0.1% for the calculation of the purchase price not give leaseholders hope? Does being able to calculate the value of the leasehold not give any hope? Does making the process of buying the freehold easier and less expensive not give leaseholders hope?

simondv

They are not benefiting by thousands of pounds as you put it, they are paying a bit less for something that should be free in the first place. The leaseholder has gained no benefit by having a remote investor embedded in their home.

worzel_gummidge

simondv wrote: »

They are not benefiting by thousands of pounds as you put it, they are paying a bit less for something that should be free in the first place. The leaseholder has gained no benefit by having a remote investor embedded in their home.

The freehold clearly has a value otherwise nobody would have bought it from the developer in the first place. The leaseholder wouldn't want it. So why should it be free? It is the article by Money Saving Expert that says leaseholders could save thousands. I'm just pointing people who don't seem to understand what the Law Commission proposals mean to the article. These are not my words and I think MSE are considered trustworthy by its readers so perhaps anybody who disagrees has their own agenda?

Have you considered that the amount the freeholder paid the developer for the freehold could be less than they receive under these proposals? Less than the leaseholder was told it would cost even which was most probably calculated using the old method? If you agree with this please say so because I'm sure there are a lot of leaseholders reading this.

The reason why is that the rent will now be capped at 0.1% of the value if that proposal is adopted by the Government. Previously it was whatever ground rent was in the lease which could be greater than 0.1% and the value being greater than 0.1% has created a lot of anger from leaseholders as well as the fact in some cases the ground rent doubled every 10 years. if you read the article by MoneySavings Expert there is also potentially a saving in regard to "marriage value". This amount, along with the ground rent value, is used to calculate the value of the freehold and on average it's going to go down if the more attractive proposals are adopted.

Could you at least confirm what I'm saying is correct in regard to the calculation?

Marg55

It is a very disappointing report. Upon retiring I used some of my pension money on a flat for my son to live in while he completed his PhD. Far from being an investment for my children, it has turned into a financial drain. The freehold is being auctioned but we can't get hold of the details about it. The management charges have ramped up to £1700 a year with the management company charging this for two years for painting on a separate block which has not even been done ... Leaseholders of flats have more protection than the unfortunate people who have bought houses, only to have the freehold sold. Where is the emphasis on the human rights of leaseholders? Scotland managed to get rid of leasehold, so why can't England? Freeholders speculated for financial gain. Leaseholders thought they were buying property not time and the potential to be financially abused on an often outrageous scale.

Quicksand

1 - none of the leases were described as leases, they were described as leasehold. 2 - London has a monopoly on leasehold. People can only realistically buy a flat; inevitably leasehold.
3 - all properties are advertised as 'for sale' not 'for lease'. Clear mis-selling across the board.
4 - throwaway comments of 'sue your solicitor' make it sound simple like that takes a few minutes and free to arrange!
5 - 'didn't you read the contract' type comments is victim-blaming. Leaseholders did not write the contracts, nor develop the laws that they relate too - freeholders did. Now freeholder support and lawyers say you can't change the law and preach the sanctity of contracts.
6 - you've got more consumer legal protection if you bought a kettle from Argos than if you bought a leasehold property worth hundreds of thousands £. If you bought a kettle from Argos that they advertised for sale and then the small print in the contract of purchase said it was only rented, people would be screaming their heads off about the injustice and mis-sell - not saying 'ah you should have read the contract!'.

Nlc

I agree. This report gives little direction. Still so many possibilities.

So many references throughout the document about A1P1 Human Rights in relation to freeholders yet total disregard for leaseholders.

Hope your a member of the NLC?

BBH123 wrote: »

Most Leaseholders will find this report extremely disappointing , the only possible change is likely to be marriage or hope values and the gist of the requested reforms appear stifled because Freeholders clearly have a stronger human rights case to make money on the back of other people than Leaseholders do to own their property unencumbered.

For existing Leasholders this does little to help them financially other than to suggest an easier way to calculate the costs not reduce the costs so it is certainly not the holy grail to ease Leasehold problems.

What about the people who are stuck in limbo now and cant sell their properties they don't have time to wait possibly years for resolution. Does the government have social housing on standby for all those whose lease is due to default / expire ?