Will banning new leasehold properties decimate the value of existing leasehold flats ?

pink4655

Just wondering what impact this will have on existing leasehold flats. Is it inevitable that will be very much less attractive than flats without leaseholds and the values will tank? I guess it will take a while for the new stock to be developed so the impact will take a while at least..

Newbie_John

Doubt it, it will make the new builds more expensive.

Tabieth

I don’t think the details have been released / agreed yet, we need to wait for the white paper. But I assume that any changes will have to consider those with existing leasehold properties and make provision. If existing leaseholders can access / obtain / buy the common hold that seems ideal. 

I’m glad. Having been burned with a leasehold property in the past, I can really see the need. The system isn’t fit for purpose in the 21 century and needs an overhaul. 

user1977

There'll be transitional arrangements which will be aimed to avoid any great disparity between tenures.

Section62

pink4655 said:

Just wondering what impact this will have on existing leasehold flats. Is it inevitable that will be very much less attractive than flats without leaseholds and the values will tank? I guess it will take a while for the new stock to be developed so the impact will take a while at least..

It will likely create a new set of problems, although it may take a while before they show up.

Perhaps leasehold will eventually become attractive vs commonhold.... make one convenient monthly payment and let someone else deal with all the 'stuff'.

As always, it will be done to the exact wording of the law, and how courts opt to interpret the law.

Grumpy_chap

I think the simple answer to the thread title is "no".
New flats will not be leasehold in the way that is currently the norm. 
We do not yet know what the alternative proposal is for ownership and management of the common parts - there is still a cost to be met one way or another from the respective flat owners.
No timeline for the change to be introduced.
If and when the change is introduced, there will not be suddenly a lot of new flats so the existing flats with existing arrangements will stay standing.  Supply and demand will maintain the value of existing flats.

youth_leader

I've just been to hell and back trying to help my 87 year old aunt extend her lease of 74 years, it has cost her £10K.  I had agreed to pay her freeholder's costs and my aunt asked for the money in December, she hasn't heard anything back yet.

She hardly understood the process of the lease extension, so I was nervous to introduce the idea of also buying the freehold. 

eddddy

As the law stands at the moment, commonhold is very similar to a well set-up and well run "shared freehold".

For example, the structure of  the building and common parts are owned and managed by a "Commonhold Association" - which is very similar to a company set up to own and manage a "Shared Freehold".


Perhaps a key difference is that, currently, there are no laws specifying how a "shared freehold" should be run - so some are run very badly. (As posts on this board frequently show.)

But the law specifies how a "Commonhold Association" must be run - for example, meetings of flat owners must take place, decisions must be voted on, etc. (Which already happens in well-run "shared freeholds".)




But currently, commonhold flat owners don't have the same protections as leasehold flat owners. So, for example, I wonder how commonhold  flat owners are protected in the following type of situation?

• A 3 storey block of flats

• The following proposal is put to a vote - the common areas of the ground floor and 1st floor should be redecorated, but not the 2nd floor

• The vote passes with a 2/3rds majority - because everyone on the ground floor and 1st floor votes in favour, and everyone on the 2nd floor votes against

• As a result flat owners on the 2nd floor have to contribute to cost, even though their common areas aren't redecorated

Leaseholders would have the right to go to a leasehold tribunal to challenge the redecoration charge as "unreasonable", given the circumstances. But commonholders don't have that right.

I don't know how a situation like that is resolved, I'd be interested if others know.

Bookworm105

obviously if people can choose between leasehold and commonhold the property would need to be spectacular to justify being exposed to leasehold by choice.

so yes, prices will plummet.

itwasntme001

If leasehold will be banned, it removes a large chunk of the profit margin for developers.  Surely this would mean less being built unless prices rise?  Which means prices will rise in general?

daveyjp

The recent huge increases in service charges on some developments is already decimating the market for some developments.

Despite all my warnings (which aren't just confined to service charges), a relative is just buying his first home and has chosen an apartment on a new out of city centre development.  Sometimes experience and knowledge count for nothing.