Freeholder Problems

princeofpounds

NameUnavailable said:

I am a cynical type and wonder just how much power a Tory government will try to take away from people like that! Many MP's are also landlords.....

Many MPs are AST and commercial landlords. Not that many are holders of large freehold portfolios. That's entirely different.

Moreover, a wider reading of history doesn't support the idea that MPs are totally in hock to freehold landlord interests. Quite the opposite in fact, given that the position of freeholders has been massively eroded over the years.

Labour introduced the 1967 leasehold reform act, which allowed leaseholders in certain low-rated houses to enfranchise (forcibly buy the freehold). Labour extended that system a bit to raise the threshold in 1974. But it was the Tories who actually made the system universal in 1993 and, most importantly, extended the rights of collective enfranchisement to flats. Then Labour removed marriage value for long leases over 80 years in 2002, and then it was the Conservatives who are (or were) pushing the next leasehold reform act to deal with this LPE1 issue, amongst others, basically preventing any of the fringe abuses around freeholder fees.

In a way, it's amazing this happened at all, because it is a huge violation of the existing property rights of freeholders. Imagine lending your car to someone for a year, and then finding out that the government had legislated that actually, they could keep it indefinitely, and actually, if they renew before 6 months is up they don't need to pay you the true value any more. That's not to say there weren't good reasons to do this - there were, although I think freeholders were technically treated roughly on the financial side - just that it has been a sweeping change that has at time been pushed by both parties, despite lobbying by large freeholder interests. So some of the cynicism is unwarranted, in my opinion.

The problem is that the political system is so d@m^ slow - situations like that which the OP is caught in are so obviously unjust, and so easy to fix, but because it's a niche issue nothing is done. 

NameUnavailable

princeofpounds said:

.

The problem is that the political system is so d@m^ slow - situations like that which the OP is caught in are so obviously unjust, and so easy to fix, but because it's a niche issue nothing is done. 

It's hardly a niche issue when so many people live in leashold properties especially in the more expensive parts of the country where freehold isn't an option for all but the highest earners.

It isn't a fair system when a freeholder can effectively hold their leaseholders to ransome as in the OP's case. It's people's lives that are being messed with, over petty forms and sums of money. That is wrong on any level.

gab3x

bucksbloke said:

You are not paying any ground rent or service charge? This would normally include building insurance? Who is paying that?
Can you solicitor not treat it as an absent landlord?

No ground rent and service charge, we just share the maintenance costs (insurance included).
I will suggest the absent landlord route yet that in itself could frighten off buyers who are few and far between at the moment.

gab3x

princeofpounds said:

NameUnavailable said:

I am a cynical type and wonder just how much power a Tory government will try to take away from people like that! Many MP's are also landlords.....

Many MPs are AST and commercial landlords. Not that many are holders of large freehold portfolios. That's entirely different.

Moreover, a wider reading of history doesn't support the idea that MPs are totally in hock to freehold landlord interests. Quite the opposite in fact, given that the position of freeholders has been massively eroded over the years.

Labour introduced the 1967 leasehold reform act, which allowed leaseholders in certain low-rated houses to enfranchise (forcibly buy the freehold). Labour extended that system a bit to raise the threshold in 1974. But it was the Tories who actually made the system universal in 1993 and, most importantly, extended the rights of collective enfranchisement to flats. Then Labour removed marriage value for long leases over 80 years in 2002, and then it was the Conservatives who are (or were) pushing the next leasehold reform act to deal with this LPE1 issue, amongst others, basically preventing any of the fringe abuses around freeholder fees.

In a way, it's amazing this happened at all, because it is a huge violation of the existing property rights of freeholders. Imagine lending your car to someone for a year, and then finding out that the government had legislated that actually, they could keep it indefinitely, and actually, if they renew before 6 months is up they don't need to pay you the true value any more. That's not to say there weren't good reasons to do this - there were, although I think freeholders were technically treated roughly on the financial side - just that it has been a sweeping change that has at time been pushed by both parties, despite lobbying by large freeholder interests. So some of the cynicism is unwarranted, in my opinion.

The problem is that the political system is so d@m^ slow - situations like that which the OP is caught in are so obviously unjust, and so easy to fix, but because it's a niche issue nothing is done. 

Wow, this is such a great post. It gives a good overview of how this issue is very slowly progressing through the legal system and it gives long term hope that this will be resolved. This of course doesn't help me now but still great to learn that it looks like we're heading in that direction.

I don't think car example is a good fit as car is a fractional cost of a freehold in Central London. If cars on average had a price tag of £1.2m (price of freehold house in my area) then I am sure we would have had similar systems in place.

gab3x

NameUnavailable said:

princeofpounds said:

.

The problem is that the political system is so d@m^ slow - situations like that which the OP is caught in are so obviously unjust, and so easy to fix, but because it's a niche issue nothing is done. 

It's hardly a niche issue when so many people live in leashold properties especially in the more expensive parts of the country where freehold isn't an option for all but the highest earners.

It isn't a fair system when a freeholder can effectively hold their leaseholders to ransome as in the OP's case. It's people's lives that are being messed with, over petty forms and sums of money. That is wrong on any level.

TBH part of me thinks this is all a hustle to blackmail me for £££

princeofpounds

NameUnavailable said:

It's hardly a niche issue when so many people live in leashold properties especially in the more expensive parts of the country where freehold isn't an option for all but the highest earners.

Chill, I use the word 'niche' in context, I am not trying to minimize the importance of the problem to those stuck in it. But in terms of national legislation it is a niche issue right now. Most leaseholders have no problems getting LPE1 forms from their freeholders. Delays may be more frequent, but refusing to engage is more rare. It is not a form that is strictly necessary for property to transact, although it has become increasingly custom to deem it necessary (perhaps wisely). There is a vast amount of legislation that needs to be dealt with on other topics right now. 

I totally share your sense of injustice on this issue, and to me what is more upsetting is the solution is so minimal that it would be easy to do. But this has been sitting on some civil servant's desk in a Ministry for years, it's not just (or perhaps even chiefly) about parliamentary time - it's about all the bumpf they go through before it gets to that stage. Endless position papers, consultations and the like. You have to see it to believe it, how bureaucratic it all becomes. 

princeofpounds

gab3x said:

I don't think car example is a good fit as car is a fractional cost of a freehold in Central London. If cars on average had a price tag of £1.2m (price of freehold house in my area) then I am sure we would have had similar systems in place.

It's not intended to be a perfect analogy, just to illustrate that freeholders really did lose massive property rights over time. Most people have no sense of what owning a massive portfolio of freeholds is like, but they may have more sense at the scale of a vehicle.

Government arbitrarily stripping someone of an asset (even if it's an intangible asset of a leasehold property reverting to the freeholder) and giving it to someone else is no more intrinsically righteous if it's a £10 asset or a £10m asset. It's probably been the biggest indirect tax on wealth we've ever seen in this country and people almost never remark on it.

But there were concerns about issues such as the what the legal status of tenure in one's own home should be, and there were (and still are to some degree) good arguments around abusive management practices of some freeholders.

Interestingly, there are other examples with some analogies to this situation which flowed the other way, with rights moving towards capital owners rather than away. The creation of the AST tenancy in 1988 was an attempt to remedy a situation in short leases where the law had become dramatically unbalanced in favour of tenants, and against landlords (note - this is very separate to freehold/leasehold landlord law, to be clear). But in this case, many of the rights of the sitting tenants under the old system were not removed (except for some of the more ridiculous ones like inheritance of tenancy, IIRC) - it only applied only to new tenancies created.

NameUnavailable

gab3x said:

NameUnavailable said:

princeofpounds said:

.

The problem is that the political system is so d@m^ slow - situations like that which the OP is caught in are so obviously unjust, and so easy to fix, but because it's a niche issue nothing is done. 

It's hardly a niche issue when so many people live in leashold properties especially in the more expensive parts of the country where freehold isn't an option for all but the highest earners.

It isn't a fair system when a freeholder can effectively hold their leaseholders to ransome as in the OP's case. It's people's lives that are being messed with, over petty forms and sums of money. That is wrong on any level.

TBH part of me thinks this is all a hustle to blackmail me for £££

Surely the freeholder would just respond with a demand for £££ to provide the info if that was the case. Not responding at all just seems odd, unless he's being difficult because of some other issue.

Does the freeholder arrange your buildings insurance (most insurers would insist the f/h does it)? You say he owns one of the flats so presumably he contributes to the maintenance and insurance? 

bucksbloke

gab3x said:

bucksbloke said:

You are not paying any ground rent or service charge? This would normally include building insurance? Who is paying that?
Can you solicitor not treat it as an absent landlord?

No ground rent and service charge, we just share the maintenance costs (insurance included).
I will suggest the absent landlord route yet that in itself could frighten off buyers who are few and far between at the moment.

No issues, you'll just need to buy some indemnity insurance. 

gab3x

NameUnavailable said:

gab3x said:

NameUnavailable said:

princeofpounds said:

.

The problem is that the political system is so d@m^ slow - situations like that which the OP is caught in are so obviously unjust, and so easy to fix, but because it's a niche issue nothing is done. 

It's hardly a niche issue when so many people live in leashold properties especially in the more expensive parts of the country where freehold isn't an option for all but the highest earners.

It isn't a fair system when a freeholder can effectively hold their leaseholders to ransome as in the OP's case. It's people's lives that are being messed with, over petty forms and sums of money. That is wrong on any level.

TBH part of me thinks this is all a hustle to blackmail me for £££

Surely the freeholder would just respond with a demand for £££ to provide the info if that was the case. Not responding at all just seems odd, unless he's being difficult because of some other issue.

Does the freeholder arrange your buildings insurance (most insurers would insist the f/h does it)? You say he owns one of the flats so presumably he contributes to the maintenance and insurance? 

He is old and apparently of ill health. There are no issues, our interaction has been super minimal. It is bewildering. 

He arranges building insurance but of course I have no idea whether this is done or not and I haven't been billed for anything for the last couple of years.