“Dear Mr Javid,
You do not know me. I am a residential leaseholder in England. Please do not be disappointed if you received a relatively low number of responses to your leasehold reform consultation. More importantly, please do not misinterpret this as evidence of a silent majority of happy campers. I’m sure you know this would be an absurd extrapolation. People can be rather cynical that their views actually matter, even unto failing to vote.
Besides, you already have all the evidence you need as to the dire state of the leasehold ‘caper’ in England and Wales. As you correctly said yourself, “I don’t see how we can look the other way while these practically feudal practices persist”. Quite right. In addition, Forward Together, the Conservative and Unionist Party’s Manifesto for 2017, committed to ‘crack down on unfair practices in leasehold’.
Perhaps the lack of responses is a sign that leaseholders trust their government to keep its word?
Either way, I am writing to plead that you keep the bigger picture in mind when you wade through the inevitable vested interests intent on protecting their ‘nice little earner’.
There is a catch 22 when experiencing long term systemic and unfair exploitation: how to explain while avoiding seeming an obsessive. I try to avoid howling at the full moon even after years as one of England’s four million exploited leaseholders. Here I would like to focus on what I hope you will not disagree is a fair assessment, and not a fulminating rant.
Leasehold sucks. No, to be fair it does. Volumes have been written on the subject. Inevitably there are those who enjoy a nice little (and usually rather large) earner from leasehold: freeholders, managing agents, in-house contractors, legal professionals, valuers, tribunal panels and possibly even psychiatrists, followed by debt collectors. You might be surprised where some of these people lurk in the higher strata of English society. They will put forward erudite and thoughtful reasons why residential leasehold is perfectly fine. They will pay lip service to better regulation, if rather vague on the detail.
They have good cause to be optimistic. England has cherished and protected feudal leasehold since, er, feudal times. Almost alone in modern countries. A remarkable resilience against reform and civil rights, you could say? It is not as if the problem was not recognised, just as you have recognised it in 2017.
In 1998 the government of the time concluded: “…leasehold tenure is almost unique to England and Wales. It has its roots in the feudal system and gives great powers and privileges to landowners. It is totally unsuited to the society of the twentieth – yet alone the twenty-first – century.” and “The Government believes the leasehold system is fundamentally flawed.“
One could hardly put it more clearly. As ever, of course, the devil is in the detail, and there is an awful lot of detail as you know: how many Landlord and Tenants Acts can you recollect? I sympathise for they are legion. Yet somehow none to date has managed to solve the broken feudal system of leasehold.
You might have thought the vested interests would have felt some apprehension in 1998, and perhaps determined to self-regulate after the puppy of a Reforming Act that followed, but we can now see that, far from slowing down their greed and exploitation, they went on to ever more audacious fleecing capers. It would be remarkable if the champions of self regulation and a wee bit of tinkering would repeat their claims that all is generally fine, but I fear they will. A threat to easy profit does seem to make for shamelessness. Once people were miffed at the threat of losing slaves. Or giving countries back to their rightful owners (who ironically quickly abandoned the English leasehold system).
The problem, I would venture, is simple. Leasehold is fundamentally flawed because it survives on a cynical misapplication of basic English terms.
The ‘Landlord’ is an archetype in English law and consciousness. As is the ‘Peasant’. You might notice how instinctively deferential property court judges are to landlords? The reason is simple.
The term ‘Landlord’ denotes a superior, hard-working, and therefore deserving, Englishman or woman who invests personal wealth in owning land or property and takes responsibility for its upkeep. The ‘Peasant’ is the tenant. Commonly, you will find the adjective “mere” added for emphasis. An English peasant got to know their place.
But here, Mr Javid, is the rub of the matter. In residential leasehold, the so-called ‘landlord’ is not the entity with the greatest investment. Not by a long lease. The government saw this in 1998:
a fundamentally unsatisfactory tenure
“The Government considers that leasehold is a fundamentally unsatisfactory tenure particularly for flats, since the leases for flats tend to provide greater scope for abuse by the landlord. The value of the landlord’s interest in the property is normally far less than the leaseholders’, until the lease nears its end. Yet throughout the life of the lease, the landlord has far more power than the leaseholders. Some landlords use that power responsibly and moderately, but others do not. The worst of them abuse their position to exploit their leaseholders in a wide variety of ways. The reform legislation of the last thirty years has had only limited impact.” Paragraph 4, 1998 consultation paper, “Residential Leasehold Reform in England and Wales”.
If you are in any doubt, here is a graph based on the 2016 Savills Relativity tables:-
You will notice that the Landlord’s share of total value in the property remains less than the collective leaseholders’ share until the final TWENTY YEARS of a ninety-nine year lease! Bear in mind leases may be 125 years, 250 years, or even 999 years.
The terminology in feudal leasehold turns the English language on its head. The people investing the most and paying all the costs are classed as mere tenants, while the speculators and investors who bring little to the ‘feast’ are classed landlords.
sever the link between ‘freeholder’ and ‘landlord’
If I could pass one single clause Act, I would sever the link between ‘freeholder’ and ‘landlord’. What you would call a freeholder I cannot say. What is an appropriate term for something that feeds off others and gives nothing in return?
Buying freeholds for far less than 1 to 5% of value is possibly the greatest wealth steal in the UK. This is the true expropriation often cited by those who claim reform is impossible as it would expropriate the property ‘rights’ of the freeholders. (Just as the slave owners argued?) The fact that leasehold is still legal expropriation does not make it defensible.
Such investors find themselves bestowed with the English law status of ‘Landlord’ and granted superior human rights over their ‘peasant’ tenants.
Do you see how language matters?
Did you know that these minor investors can, as Landlord, seek the right to build on top of blocks of flats they ‘own’ for a miserly 1-5% investment, and can do so over the wishes of the ‘peasants’ who bought the leases at full market value? The English courts say ‘yes’ to this because the landlord has superior rights.
Freeholders are not ‘landlords’ at all. They not only invest a paltry sum, they pay not a penny in maintenance of ‘their’ property. Can you explain why freeholders have no liability for any share in the upkeep of their property? Fails the British fairness smell test, does it not, suggestive of a ‘sham’ via misuse of terminology? In feudal times at least, the ‘landlord’ had occasion now and then to pop out to defend his peasants in their hovels from external threats. If only to defend his property ‘interests’.
This, you see, is why leasehold is fundamentally flawed. This is not a ‘landlord and tenant’ matter at all. Terming it thus merely creates a sham. A thing that is not what it purports to be. A peculiarly English sham at that these days.
Leasehold is un-fixable because it is based on a fallacious concept. Can it be British fair play that those who profit from a terminological sham have as valid a point of view as the victims of it? Yet freeholders’ interests are given more weight as ‘Landlords’ by English legislators and courts.
I have not burdened you here with the outrageous consequences of the sham, such as abysmal accounting and untransparent billing, and profiteering through mismanagement of service charges. I did not wish to come across too obsessive.
The DCLG states it wants to promote home ownership? How can it be British fair play to sell flats and houses as ‘home ownership’ to four million citizens only to class them in law as ‘tenants’?
Please let no-one claim to you that leases are sold at a discount, or that the facts are made clear. If the true nature of the sham was made clear, the system would collapse because no sane citizen, I venture, would buy leasehold. Would you advise it as things stand?
Until you sort the legal terminology out, judges will never, seems to me, catch on to the true nature of the leasehold sham. All and any legal protections depend on judges. Leaseholders ought in law to have the greater human right. All the speculators and hangers-on that feed off a broken feudal system ought to be forced to go out and earn a living like the rest of us ‘peasant’ citizens.
The modern British way?