Should the Government act NOW to reform leasehold? LEASEHOLD SCANDAL

princeofpounds

Katiejane13uk said:

Have you read what the campaign is asking for?  The government have already said they are going to legislate to BAN future leasehold houses.  They have also committed to legislating to set future ground rents to ZERO.  Thats already happening as a direct result of our campaign.  I set up the petition to help push this legislation through.

It's not really a BAN in big letters though is it, in the way that guns or drugs are banned. It's replacing one form of tenure with another.

Basically, the government invented a new type of tenure called commonhold. Commonhold is different in terms of of legal details, but in almost all major practical respects it is identical to share of freehold, which is a structure that is perfectly possible in the current legal set-up, and indeed one that leasehold tenants have a right to access to (with some conditionality) through statutory enfranchisement procedures.

https://www.lease-advice.org/advice-guide/commonhold/#:~:text=Commonhold is a new type,can own the property for.

Indeed, the main advantage of commonhold is defined by: 
[quote]The major advantage of commonhold is the very high level of standardisation of documents and forms. Managers dealing with commonholds know that most of the documents they will have to deal with will be in a standard format and will contain standard wording, as most of the commonhold association’s constitution and the CCS are set out in the Commonhold Regulations.[/quote]

Given that high praise, it's no surprise that commonhold didn't set the world on fire... last time I checked I think there were about a dozen buildings in the UK that adopted the new form voluntarily? Even the many share-of-freehold buildings didn't bother to change.

Interestingly, there is one other big difference, which is that commonhold unit-holders actually have less rights to challenge service charges than leaseholders. To be fair, you can resort to legal action if the commonhold association procedures are defective, but it's a far less direct process.

[quote] As there is no landlord or tenant, there is no need for the extensive legal rights and protection that are available to leaseholders through the various Landlord and Tenant and Leasehold Reform Acts. This means that, as a unit-holder, you do not have the right to challenge management and other costs at the First-tier Tribunal (Property Chamber) (in England) or the Leasehold Valuation Tribunal (in Wales), and the commonhold association does not have to formally consult you over proposed work or contracts.[/quote]

Anyone with any sense knows that having a share-of-freehold arrangement is no guarantee of good building management; although on average there are less conflicts of interest, there are also problems around amateurism, internal disputes, difficulties in reaching quorum on decisions, occasional tendencies to postpone needed investment and so on. If anyone is expecting commonhold to solve these problems they are going to be disappointed.

Interestingly, commonhold structure do allow for covenants and conditions to be put in place. Permission to modify units can be at the whim of the commonhold, for example. Developers can retain certain development rights to the site through the use of a annexe to the commonhold.

Generally, I support the shift to the new form of tenure, but let's not overegg the pudding on what it will achieve. For new buildings - it will mean less stupid people getting surprised when they realise that they need to pay ground rent or extend leases. It will mean something similar to share of freehold will become the norm. It will end the lease extension trap in shared ownership and the AST trap for escalating ground rents. But it's not going to revolutionise people's experiences of service charges, or change much day-to-day at all.

davidmcn

rock-on_2 said:

I've read through the posts on this subject and I cannot believe some of the comments from people who have absolutely no idea about the problems leasehold causes.  
Let's just clarify what leasehold property ownership actually means: 
It means you own absolutely nothing, not even a door handle.
You get a mortgage to literally pay rent up front to some greedy landlord who, in the case of flats in particular, can increase service or any other charges to whatever level it feels it can get away with.
This is touted as your home and then you find you have to ask permission in some cases to even re-decorate.  Not only do you have to ask permission but you have to pay for that privilege.  That is buried well within the conditions of any lease and very rarely is this pointed out by any solicitor. If you are not aware this could be an issue how are you supposed to find this within the pages of gobbledegook of a lease?

You seem to be unaware (or deliberately ignoring) that covenants aren't a feature peculiar to leasehold properties, and any property with communal charges is going to have scope for disputes about how those are managed. You don't need to spend long on this forum to find owners of freehold properties complaining about both those issues.

Leasehold is of course a nonsense, but you'd do well to concentrate on that rather than conflating it with various other issues.

NameUnavailable

Comms69 said:

NameUnavailable said:

Amazing the attitude of some on here. Do adults need hand-holding? It's not about that it's about a fair process.

Most EA's I'm talking to dont even understand some basic principles of leaseholds so how can buyers be expected to know more? Most people really don't understand what they're potentially getting into and EA's and solicitors don't explain it to them. You almost need to do a degree on the subject before buying!

There are many 'tripwires' with a leasehold property so I do sympathise and do agree that the Govt. need to amend the law asap.

EAs arent the ones spending hundreds of thousands of pounds.....

True, but they are in the business of marketing/selling property and should really understand what they're selling don't you think?

Developers are just as bad, they sell flats but talk about 'home ownership' which isn't what they're selling at all.

Heck, even if you buy a used car the dealer can typically tell you what engine it has, mileage, previous owners etc. If it was a EA they'd just say 'dunno' or 'ask you solicitors to find out'! Imagine, having to instruct a solicitor to ask what the mileage is on a used car! (yes I know it's easy to check MOT history and the mileometer in the car).

The property business badly needs and FSA type body to oversee it's dealings.

Comms69

NameUnavailable said:

Comms69 said:

NameUnavailable said:

Amazing the attitude of some on here. Do adults need hand-holding? It's not about that it's about a fair process.

Most EA's I'm talking to dont even understand some basic principles of leaseholds so how can buyers be expected to know more? Most people really don't understand what they're potentially getting into and EA's and solicitors don't explain it to them. You almost need to do a degree on the subject before buying!

There are many 'tripwires' with a leasehold property so I do sympathise and do agree that the Govt. need to amend the law asap.

EAs arent the ones spending hundreds of thousands of pounds.....

True, but they are in the business of marketing/selling property and should really understand what they're selling don't you think?

Developers are just as bad, they sell flats but talk about 'home ownership' which isn't what they're selling at all.

Heck, even if you buy a used car the dealer can typically tell you what engine it has, mileage, previous owners etc. If it was a EA they'd just say 'dunno' or 'ask you solicitors to find out'! Imagine, having to instruct a solicitor to ask what the mileage is on a used car! (yes I know it's easy to check MOT history and the mileometer in the car).

The property business badly needs and FSA type body to oversee it's dealings.

No I dont. Because they aren't selling. The difference, as i've pointed out to another poster, is that buying a house is not comparable to buying a car. 

You say it needs more oversight, i say it needs less. I want the state to have the absolute minimum input into daily lives. 

spoovy

rock-on_2 said:

I've read through the posts on this subject and I cannot believe some of the comments from people who have absolutely no idea about the problems leasehold causes.  
Let's just clarify what leasehold property ownership actually means: 
It means you own absolutely nothing, not even a door handle.

I understand pretty well what leasehold means thanks, because when I first encountered the word I looked up what it meant.   About five seconds later I realised that I didn't want to ever buy a leasehold.  This process took about 10 seconds and didn't seem particularly difficult.

chris_leaseholder_missold

So after reading all these comments i can see that if people buy a product then they should have no protection because they were naive (thanks a lot). I mean when i bought my house i tried to make sure everything was done correctly, i instructed a solicitor to do the conveyancing and expected a government backed, 5 out of 5 for customer satisfaction builder to be honest and open in their product. What i didn't expect was that these developers had a way to make more money and lie to us to get the sale. Some of you say we should have known or read the contract/lease but selling freeholds on to investors isn't a known fact so tell me how we should know this before we sign up? If i asked the developer when can i buy the freehold and they say 2 years by law and then say to the solicitor we wanted the freehold but we can only get it after 2 years and they say "ok", then what? We didn't know the developers had a scheme to sell freeholds to investors. The beauty of this complaint is that when it happened to me i thought oh no it must be just me that got suckered in and i'll live and learn but actually i found the leasehold campaign and saw it had happened to thousands of people and oddly by the same lying techniques! What a shock! 😒 Knowing others had been lied to makes you realise its not just your own failure to ensure you buy the right product, this was a systemic plan by the developers and a clever one. Tell the buyers they have to wait 2 years and you can buy the freehold for a low fee and then sell it on before they even realise!? To me that is a clever, deceiving tactic which actually caught out thousands of people. Buying a property with a family and trying to juggle everything in between is a nightmare so this "why didn't you get it in writing" is rubbish as you have over a hundred questions to ask when buying a house so you ask a question, get the answer and move on. You expect the truth and this one is a big lie so you might write off the odd little lie but owning your freehold is a big part of the property. If thousands of people had the same issue and all fell for it then it is a market failure and needs to be corrected. If it was just the odd person making a mistake then fair enough but it isn't. The next thing you know you are listening to what other leasehold issues there are and think why the hell is leasehold still around? It is crazy it still exists....so many pitfalls and with all the cladding problems and service charges that are escalating it is no wonder a campaign to abolish has really taken off. I'm not even in a horrible situation when i compare people living in flats but i can see a bad thing when i see one and i don't like the common man/woman taken for a ride by these big corporations who think they can do what they like without any comeback. The fight continues and yes the government should act now to reform the leasehold scandal! It has been on their books since 2017! 

Comms69

spoovy said:

rock-on_2 said:

I've read through the posts on this subject and I cannot believe some of the comments from people who have absolutely no idea about the problems leasehold causes.  
Let's just clarify what leasehold property ownership actually means: 
It means you own absolutely nothing, not even a door handle.

I understand pretty well what leasehold means thanks, because when I first encountered the word I looked up what it meant.   About five seconds later I realised that I didn't want to ever buy a leasehold.  This process took about 10 seconds and didn't seem particularly difficult.

Dont be ridiculous, i cant be expected to research something i'm not sure of, when i'm spending £100k+!!!!

hazyjo

You think there won't be cladding issues with people if flat owners own the freehold between them? Or are you actually saying you don't think flats should exist at all?!

thearchitect

princeofpounds said:

Given that high praise, it's no surprise that commonhold didn't set the world on fire... last time I checked I think there were about a dozen buildings in the UK that adopted the new form voluntarily? Even the many share-of-freehold buildings didn't bother to change.

Just to be clear, you won't see it in Scotland as we don't - and have never - used anything like the freehold/leasehold system which exists in England and Wales. 

ChloeManoey

Yes, it needs reform, obviously. 

What it doesn't need is a social media campaign making us (leaseholders) look like a bunch of whinging numpties. 

Yeah a lot of things about leasehold are baaad, but you also have to take some adult responsibility and admit that actually, some of you/us messed up and made a poor decision when purchasing, failed to research, didn't ask appropriate questions, and signed something you didn't understand.