Reform of leasehold

Reform slide

Real reform at last appears to be in the air in 2017

The straw that broke the camel’s back seems to have been the sheer undiluted greed of freeholders hiking ground rents to an eye watering level: doubling every ten years. On top of this selling houses as leasehold for no obvious reason other than to create a ‘bolt-on’ asset class.

Following a debate in the Commons on 20 December 2016 – championed by the All Party Parliamentary group on Leasehold and Commonhold Reform supported by The Leasehold Knowledge Partnership charity under the joint chairs of Sir Peter Bottomley (Conservative) and Jim Fitzpatrick (Labour) – the Conservative government published a white paper Fixing our broken housing market in February 2017 which highlighted the Government’s aim to improve consumer choice and fairness in the leasehold sector and a commitment to consult on measures to tackle unfair and unreasonable abuses of leasehold. The white paper focused on new leasehold houses and onerous ground rents as areas where most urgent reform might be needed but with wider reforms to follow.

The APPG published a thoroughly researched report in April 2017 with its recommendations for reform: A preliminary report on improving key areas of leasehold and commonhold law .

Lastly as of this date, the Department for Communities and Local government (DCLG) published a consultation paper called Tackling unfair practices in the leasehold market, with a submission deadline of 19 September 2017.

In the consultation paper, Sajid Javid, the Secretary of State for Communities and Local Government, is recorded as saying, “as a government committed to building a fairer society, I don’t see how we can look the other way while these practically feudal practices persist”. In addition Forward Together, the Conservative and Unionist Party Manifesto 2017 commits to ’crack down on unfair practices in leasehold’.

It seems that, at the very least, developers will be banned from selling leasehold houses and new flats will be limited perhaps to peppercorn ground rents. While these reforms would be breathtaking for the English parliament to enact, the obvious result will be to blight all existing leases if reforms do not go further.

My grievance after many years caught up in the leasehold caper at the wrong end of the branding iron is how freeholders are termed ‘landlords’, as here in the consultation paper:

The landlord is the person or organisation who owns the freehold (or superior leasehold interest) and may also be called the lessor or freeholder. This means that they retain ownership of the land on which the property is built.” (para 2.1).

Landlord’ is an archetype in English law. The term denotes a superior entity who invests personal wealth in land or property and continues to take responsibility for its upkeep. Freeholders may start like this, but they invest in property to sell leases at full market value, make a significant profit, and never again spend a personal penny farthing on ‘their’ property. It was this exact feudal approach to land control that led to rebellions in the old Empire and now leaves England and Wales alone together to suffer under the yoke of such Lords of the Land. Not ever to be mistaken for decent genuine landlords.

Freeholders are freeloaders who treat leasehold as fleecehold.

Freeholders are merely investors . They suck up the wealth of their victim ‘tenants’ for absolutely no effort or commitment on their part. The building could collapse in ruin before a freeholder would open their bank account. It is profit for ‘old rope’.

A very clever caper.

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