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Leasehold Reform - Let's end the suffering


I’ve just read through the debate on Leasehold Reform on 23/5/23.
https://hansard.parliament.uk/commons/2023-05-23/debates/FF122851-B7C5-4946-A830-B548A4C6AAC3/LeaseholdReform
Four hours of reading to hear that there is all-party agreement to replace leasehold with Commonhold. Notably Peter Bottomley MP (Con), had said to Starmer ‘If you bring forward a bill, it will have all-party support…and change the lives of approx 6 million people.’ (NB Labour failed, despite it being a Manifesto Pledge in 1997, to do it!)
This from the debate on 5/6/23:
https://hansard.parliament.uk/commons/2023-06-05/debates/EB4F32CC-0DDD-4B1F-9132-AF838D5B16A6/LeaseholdReform
"...will the Government legislate to implement all of the Law Commission’s recommendations on enfranchisement, commonhold and the right to manage before the end of this Parliament—yes or no?"
Here is the Law Commission's recommendations: https://www.lawcom.gov.uk/project/leasehold-enfranchisement/
From this debate on
Freehold and Leasehold Reform
Volume 735: debated on Wednesday 5 July 2023
https://hansard.parliament.uk/commons/2023-07-05/debates/E02E226D-06CC-4197-AB47-97215AC80682/FreeholdAndLeaseholdReform"The consensus on both sides of this Chamber is that we need to see a transfer of power from management companies to homeowners, so that we can end the poor value that is too often provided by management companies, end the exorbitant fees and, perhaps most importantly of all, give homeowners the power to transfer from one management company to another, which is currently restricted"
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So, about 6 million people trapped in what we often call fleecehold. I feel particularly for those trapped in the cladding scandal and for many of us who were so happy to be in our home, that we overlooked the fact that we did not own/co-own the land it was on and that we would need to pay ground rent and service charge on their terms.
In Australia and many other places across the world, they use the Strata system:
https://www.lookupstrata.com.au/what-is-strata/
In Scotland - you all co-own the land that the homes are on - some pay a factor to manage a block and take regular payments towards communal repairs and maintenance, but residents have a lot of control over it and can fire the factor if they are no good. Each owner has a share on the Solice - the land it is on.
https://www.gov.scot/binaries/content/documents/govscot/publications/consultation-paper/2021/11/review-of-land-rights-and-responsibilities-statement-a-consultation/documents/review-of-the-land-rights-and-responsibilities-statement-consultation/review-of-the-land-rights-and-responsibilities-statement-consultation/govscot:document/review-land-rights-responsibilities-statement-consultation.pdf
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Help me write a policy on enfranchisement, commonhold and right to manage. Here's a start:
"Residential leasehold will be phased out, and all new developments will be freehold, commonhold or cooperatively owned. Existing leaseholders will be given the right to buy their freehold at a fair price or convert to commonhold or cooperatively owned.. Leaseholders under the same freehold will also be able to transfer to commonhold on a simple majority vote and without paying the unfair 'marriage value'....."
“On council estates, it may be hard to get over 50% private leaseholders in order to exercise a transfer to commonhold. Therefore, council estates will be transferred to commonhold/strata where the council will remain as one of the owners with a “share” of responsibility for the communal areas, thus ensuring that council tenants would still be protected as their tenancy would still be directly with the council and hence they would have all of the same rights as the currently do.”
“By enfranchising residents on council estates in this way, they can exercise far more control over quality and value for money of repairs and maintenance.”
Comments
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There are plenty of horror stories about collective management via RTM or share of freehold. In fact there is one at the top of the board right now. There is also plenty of protection for Leaseholders under existing law and via the First Tier Tribunal if they care to use it. It seems a case of the grass being greener elsewhere whereas in fact it is just different and no doubt has its own problems. How, for example, would the "cladding crisis" be any easier to manage under commonhold or other collective ownership models?2
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many of us who were so happy to be in our home, that we overlooked the fact that we did not own/co-own the land it was on and that we would need to pay ground rent and service charge on their terms.
Let me guess. These are people that also thought the transaction was taking too long.
I have zero sympathy for those that don't read what they're signing up for.
There's zero excuses for that.
If you flip things and it was the freeholder or management company that paid money to the tenant, would the tenant be wanting these reforms?2 -
The fact of leasehold isn't the issue IMHO it's the unregulated service company/management company industry and rogue freeholders that are the issue (of which there are many).The FTT is a last resort but it's quite complicated and most leases allow the freeholders to charge their legal costs back under the service charge!The FCA are finally waking up to challenging the extortionate commissions paid on block policies (a kickback for the freeholder basically that flies in the face of the 'treating customers fairly' mandate).There should be laws around the requirement for freeholders to respond to leaseholder requests for information/permissions and capped costs for such. Management co's should be regulated to ensure they operate to set minimum standards with simple forms of redress if leaseholders are not treated fairly.1
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The issues with leasehold that I would like the reform to address are:
- the finite time nature of leaseholds, I know in practice most leases easily outlast several generations, and probably will outlast the building itself, but this idea of needing to pay to extend the lease is absurd. At least the change to peppercorn ground rent means it doesn't continue to be expensive
- Onerous permission requirements with fees attached, e.g. for letting out, or keeping pets. If you own the flat, as long as you meet your responsibilities towards your neighbours (not causing excessive nuisance, or doing anything to jeopardize the building fabric etc) you should be able to do as you please with the portion inside your flat's boundaries.
- Management companies not being answerable to the flat owners, they're currently working for the freeholder's interests and not necessarily those of the leaseholders, even though the leaseholders are the ones paying. E.g. leaseholders should be allowed to withhold the management fee portion of the service charge while there is an ongoing dispute/complaint with the management company.
But I have read threads (including the recent RTM horror story) and on balance think some change is needed. Would like the system to give flat owners a bit more power
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We had a leasehold flat for 15 years and were always quite happy with the management agents. They did everything promptly, in line with the law and kept all costs to a minimum.Our only issues were with the freeholder when it came to extending the lease due to a land registry entry error meaning the competent Landlord thinking they had sold the block 30 years before.My siblings both own flats in another development, and their succession of management agents have seemingly been a shower of incompetence and no incentive to improve their conduct.
It would be changing the system to bring the rogues into line, without becoming onorous on those without issues that would be the challenge, and is seemingly beyond the wit of government in every other walk of live..l0 -
NameUnavailable said:The fact of leasehold isn't the issue IMHO it's the unregulated service company/management company industry and rogue freeholders that are the issue (of which there are many).The FTT is a last resort but it's quite complicated and most leases allow the freeholders to charge their legal costs back under the service charge!The FCA are finally waking up to challenging the extortionate commissions paid on block policies (a kickback for the freeholder basically that flies in the face of the 'treating customers fairly' mandate).There should be laws around the requirement for freeholders to respond to leaseholder requests for information/permissions and capped costs for such. Management co's should be regulated to ensure they operate to set minimum standards with simple forms of redress if leaseholders are not treated fairly.1
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anselld said:There are plenty of horror stories about collective management via RTM or share of freehold. In fact there is one at the top of the board right now. There is also plenty of protection for Leaseholders under existing law and via the First Tier Tribunal if they care to use it. It seems a case of the grass being greener elsewhere whereas in fact it is just different and no doubt has its own problems. How, for example, would the "cladding crisis" be any easier to manage under commonhold or other collective ownership models?
We need to lose this deference that leaseholders and tenants have and put residents, regardless of their tenure, at the heart of the decisions in their buildings.0 -
Hard_food_for_midas said:anselld said:There are plenty of horror stories about collective management via RTM or share of freehold. In fact there is one at the top of the board right now. There is also plenty of protection for Leaseholders under existing law and via the First Tier Tribunal if they care to use it. It seems a case of the grass being greener elsewhere whereas in fact it is just different and no doubt has its own problems. How, for example, would the "cladding crisis" be any easier to manage under commonhold or other collective ownership models?0
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I was merely reflecting what a lot of first time buyers say. I was not suggesting they/I never read about what we were getting into, but that buying a leasehold is all we could afford. We’d all be waiting for hell to freeze over before we could all afford to buy a freehold property and live free from bing in-hock to a land occupier as long as we live there.1
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MattMattMattUK said:NameUnavailable said:The fact of leasehold isn't the issue IMHO it's the unregulated service company/management company industry and rogue freeholders that are the issue (of which there are many).The FTT is a last resort but it's quite complicated and most leases allow the freeholders to charge their legal costs back under the service charge!The FCA are finally waking up to challenging the extortionate commissions paid on block policies (a kickback for the freeholder basically that flies in the face of the 'treating customers fairly' mandate).There should be laws around the requirement for freeholders to respond to leaseholder requests for information/permissions and capped costs for such. Management co's should be regulated to ensure they operate to set minimum standards with simple forms of redress if leaseholders are not treated fairly.
Most of the laws in this country protect land occupiers/‘owners’, including ‘owning’ people! Sure, there are some who know how to protect it, but it’s not always for the common good of the community around it. And there are many land occupiers that extract and exploit all they can from it. This is not serving anyone-not even the land occupier, as they have to bear the risk and responsibility when things go wrong.
This is why a move to Commonhold is a must have.
Leasehold - even by it’s very framing in the language - defers to someone who knows better. (It’s a problem England particularly has always had - people defer and are ruled ‘by their betters’)
It’s this blind faith that someone in charge will act in everyone’s best interests. No. They will act in their own best interest (though there may be exceptions).
(Could those that are talking about the nightmare of RTM let me know, as I am not on other threads, just this one on this topic. Thanks)0
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