Leasehold Enfranchisement Team
Tower 52 Queen Anne’s Gate
16th November 2018
Leasehold home ownership: buying your freehold or extending your lease Consultation paper
This response to your consultation is on behalf of The Federation of Private Residents’ Associations (FPRA), which as far as we know, is the only national body that represents the voice of leaseholders in England and Wales.
We have around 500 member associations representing tens of thousands of individual leaseholders. We have drafted this response on the basis of our regular daily contact with our members who inform us of the problems they encounter in the leasehold sector. This was the subject of discussion at our AGM attended by Prof. N Hopkins & Dr. N. Roberts and detailed discussions between our members.
We have a committee of both leasehold representatives and experts from throughout the sector that have also helped with the preparation of this response.
About half of our member Associations are leaseholder-owned companies which own the freehold of and manage their blocks. For those blocks where the freeholder is separate from and independent of the leaseholders of the individual flats, an enfranchisement would seem to be an essential step.
The Overall impression from our members is: –
1. We need clear, simple & easy to understand change – to much complexity already exists and for essential changes to be effective & fair, the proposals need to be easy to understand and easy to apply.
2. The legislation needs to wipe away numerous separate & superimposed acts, to give a single well draw up place for all rights.
3. The Government needs to tell all Leaseholders of the new changes wen finalised, and this needs to be part of basic process of purchasing a home in the first place, so that buying the freehold/extending the Lease is the norm.
4. We have concerns that with the “mass” of consultations from different bodies & organisations, that whilst change is desperately needed, we could end up with a mess of uncoordinated and possibly conflicting legislation.
5. We have a general concern, that most legislation is designed for a separate & independent Freeholder/Leaseholder situation, whilst in reality the Leaseholders have often acquired there Freehold and there is a more cooperative situation which is hindered by legislation and rules not helped by them.
Our membership has also commented as follows:-
The law of England and Wales should be updated to abolish leasehold.
Legislation passed by the Scottish parliament, including the Abolition of Feudal Tenure (Scotland) Act 2000, and the Tenements (Scotland) Act 2004, effectively brought leasehold to an end in Scotland. More recently, the Long Leases (Scotland) Act 2012 automatically converted remaining long leases to outright ownership.
The law for England and Wales should be brought up to date on the same or similar lines.
The current ‘leasehold’ situation is antiquated and bears no relation to current situation that people are buying their own homes when they buy ‘leasehold’ but are in thrall for years, decades and generations to a separate landowner to whom they must pay thousands of pounds, and who have decision-making rights over their homes. There is no reasonable argument for this to continue in modern times.
The law commission identified the key areas of ‘wasting asset’ and ‘lack of autonomy’ which clearly show the unreasonableness of the leasehold set up.
The “wasting asset” point is significant as it is wholly unreasonable. Two flats – one freehold and one leasehold – can be sold for similar amounts and the leasehold flat requires tens of thousands of pounds of extra payment over years to keep the lease. For example, a leaseholder in Oakfield Court ‘bought’ their flat many years ago, has paid thousands of pounds in service charges, major works including getting the road tarmacked and street lights installed, and still had to pay £80,000 recently to extend the lease. The whole “wasting asset” scenario must be addressed for home owners.
The lack of autonomy point is significant and the law should be changed to give leaseholder more rights about what happens to the buildings they live in and the gardens they use, in any event and particularly because leaseholders pay service charges and costs of works. At the moment we work on ‘good will’ with the landlord about maintenance etc. But it requires a significant amount of residents’ association work that costs money in terms of time and inappropriate maintenance works are still carried out and have to be challenged. In areas such as development of the gardens etc, we have had to go to law to stop unreasonable development.
It has already been established in the United Kingdom that leasehold is unreasonable.
Any change in the enfranchisement law must either abolish leasehold or reflect the ultimate aim of abolition of leasehold.
At the moment the law requires 66% of flats in any one building to be owned by leaseholders before they can get enfranchisement.
Any change in the law needs to address this situation so that any leaseholder can get enfranchisement.
This comes down to the basics of rights to own property, and home ownership. If some flats in a block of flats are owned by individuals, and others are retained by a single company or organisation and rented out, the individual owners should NOT be penalised in terms of asset value and decision-making on what happens to the building, no matter the ratio between individual owned flats and company owned flats.
If the 66% rule is not changed (or leasehold abolished completely) leaseholders who own a flat in a block that is less than 66% owned by leaseholders may find that any change in the law to the rightful benefit of current leaseholders would not apply to them. And that is not reasonable.
We have only answered the questions where we felt our answers would help the process and we would welcome the opportunity or working further with yourselves to develop these proposals and look forward to hearing further from you.
Honorary Chairman on behalf of FPRA
FPRA REPLIES TO GENERAL QUESTIONS ON LEASEHOLD HOME OWNERSHIP: buying your freehold or extending your lease
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