England & Wales leasehold reform

davidmcn

AlexMac said:

evanescent said:

Oh and also, what is the point of a 990 years lease, really? Isn't that akin to full ownership? Why not just abolish the leasehold system like other countries did? 

having owned 5 or 6 leasehold flats over the years plus a little flat in Italy, I'd say in reply to evanescent, that the UK's leasehold system seems reasonable, as long as you have either a "Shared" freehold (where the leaseholders control the Freehold Company as Directors or Members) or a fair Freeholder who doesn't mis-manage or exploit.   

Otherwise, buildings insurance or things like cyclical or major maintenance (external decoration, roof repair/replacement, balconies, lifts, grounds...) , or even minor stuff like who pays for cleaning or external lighting energy costs would all have to be negotiated on an ad-hoc basis. Whereas the best leases really spell out who does (and pays for) what, so it's not only the top flats who fret about the leaky roof, or the middle ones who get wet when gutters leak, or the basement who has the cope with rising damp! I like shared freeholds as if there's a retired mug or two (usually moi) willing to keep simple accounts, file the odd staututory return and contact the roof repairs or decorations, you can keep costs really low and stash away a healthy sinking fund

That is of course England & Wales' leasehold system, not the UK's...things can be managed perfectly well without the tenure being leasehold, as you can see from Scotland. No need to worry about the remaining term of the lease, ground rent, running a separate company to own the freehold, etc.

IAMIAM

This will be a welcome thing for flat owners when it eventually kicks in and some form of policies are created for current properties. 

NameUnavailable

AlexMac said:

evanescent said:

Oh and also, what is the point of a 990 years lease, really? Isn't that akin to full ownership? Why not just abolish the leasehold system like other countries did? 

 I'd say in reply to evanescent, that the UK's leasehold system seems reasonable, as long as you have either a "Shared" freehold (where the leaseholders control the Freehold Company as Directors or Members) or a fair Freeholder who doesn't mis-manage or exploit.   

This is a really important point and one which I think any leasehold reform needs to address.

annetheman

All well and good but interested to know what will happen to existing leaseholds? How badly will they be affected, because they will be negatively affected. After all, why buy a 93 year lease with £250 ground rent when you can buy a 999 year lease with no ground rent?

princeofpounds

annetheman said:

All well and good but interested to know what will happen to existing leaseholds? How badly will they be affected, because they will be negatively affected. After all, why buy a 93 year lease with £250 ground rent when you can buy a 999 year lease with no ground rent?

Whilst I agree that existing leaseholds should be considered in the reforms at some point, it's not going to make a difference in the manner you suggest. The '93yr lease with £250 ground rent' is already worth somewhat less as a result of the encumbrance. The fact that other properties may have longer leases and less ground rent don't change that - after all we already have plenty of freeholds in the market which are effectively just infinite leases with zero ground rent from Her Majesty Queen Elizabeth II.

eddddy

annetheman said:

All well and good but interested to know what will happen to existing leaseholds? How badly will they be affected, because they will be negatively affected. After all, why buy a 93 year lease with £250 ground rent when you can buy a 999 year lease with no ground rent?

That sounds like an over-simplistic analysis.

There are a lot of interrelated factors, but they might include...

• A flat with a 93 year lease and £250 ground rent is likely to become more desirable and more valuable than they are now, because the cost of extending its lease (and reducing its ground rent to zero) will become cheaper.

• If new flats have 990 year leases and £0 ground rent - instead of 125 year leases and £250 ground rent - the developers will probably charge more for them.  Because they will get less income from selling the freeholds.

BernieW

The government's primary aim is to improve the lot for new leaseholders; e.g. new leases to have zero ground rent ... no new leasehold houses ... etc. Those measures are not contentious and have cross-party broad support. They should move forward in 2022/2023 ... probably.

However, the proposals to abolish 'marriage value' will see millions wiped off property company balance sheets. That is likely to see a good deal of objection and possibly some lengthy legal challenges - as you're retrospectively interfering with existing contracts and touching on 'human rights' issues. Wealthy freeholders (some of whom sit in the House of Lords) will fight and there will consequently be delays - thus this side of the proposals is likely to hit Queen Elizabeth's desk far later.

And of course, we don't yet know what the new valuation formula will be, nor what the new prescribed rates/percentages will be - so it's not possible to calculate whether those changes will be beneficial to leaseholders or not.

Watch this space!  Meanwhile, deal with the law as it presently is - and deal with your property problems accordingly. Tomorrow may not come, until next week.