Leasehold and the whole concept of leasehold is a feudal legacy that is well past it’s time.
Indeed, the word “feudal” is derived from the “fee” that a tenant paid his landlord for use of the land.
There is much misunderstanding about freehold and leasehold.
A simple explanation is that a freeholder owns the land and any properties on that land and can do what they will with that land (within reason and planning laws)
The leaseholder has a contract that entitles him to use of the land or property provided he keeps within the terms of the contract for the length of the lease.
After such a period, or if the leaseholder has failed to comply with the terms of the lease, any land or property reverts to the freeholder.
That is why it is so important not to allow the lease to run down, and why as the length of the lease decreases it becomes more vital to extend it and why it becomes so much more expensive to renew.
Over the years, leasehold has proved to be so very controversial and exploitative for leaseholders that it has ceased to exist around the world except for England, Wales and, for specific historical reasons, a few parts of New Zealand and Australia.
Though technically it exists in Northern Ireland, leasehold has been so substantially changed, it is really leasehold in name only.
Historians who have studied the Irish uprisings have in part ascribed the reasons for the rebellion and the demands for independence due to the unfairness of onerous leases foisted on the Irish people (such that it meant the people were forced into abject poverty paying large amounts of their income to English landlords simply to farm the land that though in their native country they could never own)
So can leasehold be replaced?
YES IT CAN, YES IT WAS!
Scotland showed the way.
Various acts were passed that led to the abolition of leasehold, such as the Abolition of Feudal Tenure (Scotland) Act 2000 and, of course, it would be remiss of me not to mention the Tenements (Scotland) Act 2004, which effectively ended leasehold in Scotland.
The Long Leases (Scotland) Act 2012 automatically converted remaining long leases to outright ownership to the former tenants.
Freeholders wanting compensation were given two years from 28th November 2015 formerly to demand compensation from their former tenants.
A calculation for compensation was set out by legislation based on the ground rent payable.
Crucially, while freeholders in England & Wales try to work on an effective interest rate of a notional 7% (I realise that it has been challenged in tribunals and has in some cases been set at nearer 5%) but in Scotland interest rates were set at a compulsory 2.5%.
This made it much more affordable for the former tenants. Additionally, they could pay by instalments the number of instalments being statutorily determined by the amount to be paid.
Whilst not perfect, the system adopted by Scotland is much fairer and more reflective of a modern society.
It is time England and Wales ended leasehold.
IT CAN BE DONE! IT MUST BE DONE!