The Sunday Times returned to considering leasehold yesterday and made its most damning assessment yet.
The powerful article by columnist Martina Lees considered the case of Lisa and Ray Chapple, aged 34 and 35, living in a terraced house bought off-plan seven years agon.
With £250pa ground rents courtesy of Taylor Wimpey they will face £8,000 ground rents if they stay in the property for 50 years – quite a possibility as it is unlikely to be worth anything close to what they paid for it.
The article mentioned research by LKP that housebuilders sell £300-500 million of freeholds a year; that almost 9,000 leasehold houses were sold in 2015, more than doubled figures in 2010, and that they were worth £2 billion.
“The ground rent scandal is just one example of the rot in leasehold,” writes Ms Lees.
There is the lease extension racket, revealed if not cured by the Mundy court case brought by chartered surveyor James Wyatt.
Property tribunal upholds lease extension ‘scandal’ that pays millions to freeholders
It very helpfully named the Sloane Stanley estate and the giant medical charity the Wellcome Trust, which finds a remedy for its financial needs with a dose of high-end London lease income.
Freeholders control sites with a minimal investment in them, often below 5 per cent.
The absurdity of the cost regime of the property tribunal is revealed, with freeholders cleaning up with legal fees even when they lose the case.
The appalling case of Dennis Jackson, who won a reduction in service charges and was hit for £76,000 legal fees (and forfeited his flat) is recalled.
SCANDAL: LKP stops forfeiture of £800,000 flat … over a £7,000 service charge dispute
The conclusion of Ms Lees on examining leasehold:
“It is time for parliament to abolish it altogether for new homes. Then, as Scotland has done, we should slowly convert existing leaseholds.
“As they come up for renewal, new terms should be 999 years and ground rents capped.
“Theresa May promised us a Britain driven “not by the interests of the privileged few”, but by those of ordinary people.
“It can scarcely be more needed than in leasehold.”
Related posts:
LKP tells Sunday Times reader not to buy leasehold house (and there is no excuse for them)
Sunday Times reports Taylor Wimpey ground rent scandal, as executives meet leaseholders
LKP’s essential leasehold guide in The Sunday Times … feel free to add
Sunday Times reports the forfeiture scandal of Dennis Jackson at Plantation Wharf
Leasehold first-time buyers trapped in leasehold homes with £800 ground rents, says BBC
Dear Gavin Barwell … our Taylor Wimpey leasehold house means my pension will be eroded
“It is time for parliament to abolish it ( leasehold) altogether for new homes. Then, as Scotland has done, we should slowly convert existing leaseholds.
As they come up for renewal, new terms should be 999 years and ground rents capped.
“Theresa May promised us a Britain driven “not by the interests of the privileged few”, but by those of ordinary people.
“It can scarcely be more needed than in leasehold.”
That is the only resonable conclusion. We need to stop the farce of being tenants under ‘investor’ landlords and become homeowners.
Further to some other posts, for those who are unsure whether leaseholders are tenants in law rather than ‘home owners’ you just have to read the introduction to Part 11 Sch.13 of the 1993 Leasehold Reform … Act. It reads ‘Part II Premium Payable In Respect Of Grant Of New Lease’, followed by a sub-heading of ‘Premium payable by tenant’ and then paragraph 2 starts off with ‘The premium payable by the tenant ….’
So, whether we have mortgages or not, the lawmakers have seen fit to describe leaseholders as ‘tenants’ and herein lies the problem … Parliament and the remnants of a feudal mindset that has duped people into thinking they are buying a home (whether flat or house) when in fact they have been deceived into becoming tenants under the ultimate control of a freeholder or ‘the landlord’ as Sch.13 Part II 1993 Act puts it.
There is nothing like seeing the evidence for yourself, and so if you want to check out the language of ‘landlord’ and ‘tenant’ do have a look at Appendix A (on page 45) of the Sloane Stanley Estate v Mundy on the Tanfield Chambers website:
http://www.tanfieldchambers.co.uk/upload/files/SSE%20v%20Mundy%281%29.pdf
I agree that leasehold is a racket which has been going on for years.
The estate that I live on is a mix of houses and small blocks of flats all built as leasehold by W Leech.
The lease extension for my flat cost £10000 , but as the leases on other flats have been allowed to drop below 80years and are now nearing 50 years they have been bought up by investors.
The estate is now going into a decline as the tenants don’t keep the properties in a decent state,letting the gardens become overgrown and not getting rid of rubbish.
This means that even though my property in theory should now be more valuable, in reality it isnt as nobody will pay more for my property when they see other properties going for £50000. Therefore I have paid 20% of the value of the flat to make it more marketable.
In summary I regret extending the lease and wish I had just sold it and put the money towards a new freehold property.
As you can see reducing leases can have more implications than just monetary ones. Best of luck to all those who are campaigning for the abolition of ground rents, it is long overdue.
This is rather worrying.
If a number of leases are allowed to fall under 50 years they may eventually become worthless and revert to the freeholder. If the freeholder controls 40% of the number of units, enfranchisement is not possible for anyone, and even though you have a long lease it may be difficult to ensure a decent upkeep of the common areas or of the fabric of the building.
The law is very complicated and the move towards phasing out leasehold has to be the answer or us leaseholders loose everything to the ‘investor freeholder’.
Leaseholder, thank you for your comments. If leasehold is abolished and existing leases are converted to 999 years, do you think those of us who paid to extend our leases would be compensated ?
We are not likely to ever have ‘a blanket abolishion’, the freeholder would have to be compensated and is worth reading up on the scotish model. http://www.gov.scot/Topics/Justice/law/17975/LongLeases
Scotland abolished what is essentially a feudal remnant. If we have a longer lease the compensation to the freeholder would be less.
Sadly though, I doubt we are close to that yet. Who has the balls to bring this to parliament?
Leaseholder, thank you for your comments. If existing leases are converted to 999 years, do you think those of us who paid to extend our leases would be compensated ?
NO!! ( in a word)