Leasehold housing and its problems

[Bletchleyite]

Given the number of houses sold leasehold, I think that objection is a tad niche - but very well founded.

Leasehold houses (aside from shared ownership) are a feudal scam and nobody should ever purchase one. There is no need for them bar as a means of profiteering off ground rents and fees for permissions.

Nothing niche about that - just sound financial advice.

With flats a mechanism for the shared ownership of public areas is needed but there are better models.

 

[35B]

Leasehold houses (aside from shared ownership) are a feudal scam and nobody should ever purchase one. There is no need for them bar as a means of profiteering off ground rents and fees for permissions.

Nothing niche about that - just sound financial advice.

With flats a mechanism for the shared ownership of public areas is needed but there are better models.

To be clear, my comment about "niche" is about where that point occurs in the hierarchy of decisions, not the accuracy of the argument.

 

[DarloRich]

Leasehold Houses yes. Flats no.

Never go anywhere near a leasehold house. In the olden days they used to me almost un mortgageable

 

[Buzby]

I suppose it depends on the Lease? My property has a 999 Lease (in 1960) so when I moved in in 1988, I had 960-odd years left with a ground rent of £8pa and no review permitted. Unusual in a Scottish property (which operated a feu-based system) Sheffield developer Henry Boot estates introduced in on their new-builds. By 2000 the Scottish Government outlawed it, requiring Leaseholders to set an equitable charge for the disposal, and by 2014 I was told for £2k plus legal fees, I could buy out their interest - which I did. I think it cost them more to administer than it brought in revenue.

 

[Bletchleyite]

Is the problem with flats about the ownership model, or simply because of the inherent costs and difficulties associated with flats as a housing type?

A bit of both, but there are better models used in most countries that remove the possibility of unscrupulous freeholders taking advantage financially. Most countries use a system of condominium/tenement/commonhold ownership where the flat owner also owns a share of the physical building and owns their flat for an indefinite period, and typically owns the physical parts of their flat too rather than just a timebound right to live there.

I'd buy a flat in Scotland (if I wanted to live there), just not England.

Obviously I don't want to derail the thread, but I think zeroing in on "leasehold bad" is ignoring the elephant in the room.

There are certainly other reasons why people don't like flats, yes.

Ofcourse, buildings above 18m high are now functionally unbuildable in any case.

Completely false, unless you consider all the tower blocks going up in London, Manchester etc a mirage?

For the purposes of this thread, and with reference to the comments by @Topological and @Tomos y Tanc, I think the issue with flats is the relative desirability of a house as opposed to a flat. Densification may be a worthwhile aim, but its proponents need to engage with the preferences revealed by how people choose to live and make their preferred alternative more desirable.

To be fair there are ways to densify while sticking with freehold houses, such as three or even four storey townhouses which are quite popular these days.

I suppose it depends on the Lease? My property has a 999 Lease (in 1960) so when I moved in in 1988, I had 960-odd years left with a ground rent of £8pa and no review permitted. Unusual in a Scottish property (which operated a feu-based system) Sheffield developer Henry Boot estates introduced in on their new-builds. By 2000 the Scottish Government outlawed it, requiring Leaseholders to set an equitable charge for the disposal, and by 2014 I was told for £2k plus legal fees, I could buy out their interest - which I did. I think it cost them more to administer than it brought in revenue.

Scotland is much better at this sort of thing to be fair.

Worth adding that many houses I bought are leasehold, managed by an agency that takes care of all of the streetscene, the car parks for those who do not have drives and for the apartments that are in the same development. I actually feel the leasehold system serves the area well since it means that no house particularly lets the street down. Given how many are rented by students and or others who may be less inclined towards maintaining the street scene, having a management agency taking care of everything helps a lot. However, were the properties to be managed by a bad landowner then the story may be somewhat different.

It would be possible to use commonhold or similar to achieve that end without leaving things open to abuse by a profiteering freeholder, because there isn't one - the individual homeowners all own a share of it. That is the key.

 

[HSTEd]

Completely false, unless you consider all the tower blocks going up in London, Manchester etc a mirage?

The construction in Manchester has actually slackened in recent years, at least in my anecdotal experience.

There are still some buildings going up, but nothing like there was a couple of years ago.

The building safety regulator backlog has almost certainly not helped in that regard!

 

[Peter Mugridge]

One thing to be very careful of, which won't necessarily show up including on any searches until it's too late, is where a property is freehold but is on a development which is subject to an estate management fee.

I know one person who has been trapped in such an estate for years, finding it almost impossible to sell as a result.

Estate management fees on freehold properties are a completely crooked scam - yet seem to be perfectly legal.

 

[philjo]

The original Garden City properties built in Letchworth had 99 year leases. The houses in our area were built 1905-1920 so this caused issues when prices started rising in the late 1980s as the leases were approaching their expiry. Many householders then paid more for the freehold than they did for the original house purchase 10-20 years earlier. Houses built in new estates since I think the 1960s had a 999 year lease so did not have the same issue.

Even if the freehold is purchased, any properties in Letchworth need to have “Landlords consent” prior to any proposed alterations that affect the exterior appearance of the property as they are all deemed to be in the conservation area.

 

[cactustwirly]

Leasehold full stop is a scam!

Ridiculous management fees etc, I realised very quickly it is cheaper overall to pay a bit more and get a freehold house instead of a flat

Which is why I object to all the affordable properties these days all being flats, instead of 2 bed houses etc

 

[Grimsby town]

One thing to be very careful of, which won't necessarily show up including on any searches until it's too late, is where a property is freehold but is on a development which is subject to an estate management fee.

I know one person who has been trapped in such an estate for years, finding it almost impossible to sell as a result.

Estate management fees on freehold properties are a completely crooked scam - yet seem to be perfectly legal.

I'm in the early stages of buying a house and the solicitor has flagged a potential estate charge. We're still waiting to hear about the exact details of what it entails, but there's certainly some horror stories on the Internet. From what I've read the government are in the process of regulating the fees so they have to be fair and proportionate to any work to maintain the local area. At the moment it seems that numbers can be plucked out of thin air.

 

[ABB125]

Which is why I object to all the affordable properties these days all being flats, instead of 2 bed houses etc

The problem with a small house is it's very space-inefficient. Stairways will take up a huge proportion of the floor space - stairs take up the same space regardless of the size of each floor (if you have 3 storeys, the stairs can be stacked more efficiently, which skews the calculation slightly).
A flat doesn't need to waste space with stairs.

That's not to say I disagree with your point - I'd love for more small, freehold houses to be built in urban areas.

 

[Trackman]

Was talking to someone a few weeks ago, they pay an extortionate (well, a few hundred) ground rent amount each month (not p/a). I kept asking, 'Are you sure?'

I'd buy a flat in Scotland (if I wanted to live there), just not England.

Buying property in Scotland is a completely a different ball game then in England.
This was explained to me once, and it became completely baffling and made my head hurt after a while. Think it works like a sealed bidding system until the day of sale ends (or something like that).

 

[cb a1]

This was explained to me once, and it became completely baffling and made my head hurt after a while. Think it works like a sealed bidding system until the day of sale ends (or something like that).

I've only ever bought property in Scotland.
What you describe is correct.
House goes up for sale.
Seller states last day for putting in a bid.
You put in a bid.
If you have the highest bid, you get the house.
What's baffling about it?

 

[Buzby]

you have the highest bid, you get the house.
What's baffling about it?

Ordinarily, yes. However the vendor (seller) has complete discretion on which bid to accept. It probably will be the highest bid but it doesn’t have to be.

 

[bleeder4]

One thing to be very careful of, which won't necessarily show up including on any searches until it's too late, is where a property is freehold but is on a development which is subject to an estate management fee.

I know one person who has been trapped in such an estate for years, finding it almost impossible to sell as a result.

Estate management fees on freehold properties are a completely crooked scam - yet seem to be perfectly legal.

I live in a development which is a mix of leasehold flats and freehold houses. Every property owner, both flats and houses, is a member of the company which manages the estate. We all meet up every year to decide the budget for next year. The budget includes things like re-surfacing car parks, gardening, adding new trees etc. Although the council looks after the roads the actual "fixtures and fittings" (so to speak) of the estate are managed and paid by us residents. So whilst, yes, the freehold house owners do have to contribute to the estate management fee, as members of the management company themselves they have a chance to shape the budget and decide what their money gets spent on.

 

[cb a1]

Ordinarily, yes. However the vendor (seller) has complete discretion on which bid to accept. It probably will be the highest bid but it doesn’t have to be.

If you've the highest bid, but the vendor sells to someone else, do you get told that?

 

[cactustwirly]

The problem with a small house is it's very space-inefficient. Stairways will take up a huge proportion of the floor space - stairs take up the same space regardless of the size of each floor (if you have 3 storeys, the stairs can be stacked more efficiently, which skews the calculation slightly).
A flat doesn't need to waste space with stairs.

That's not to say I disagree with your point - I'd love for more small, freehold houses to be built in urban areas.

My house is a 1 bed house, there are lots of 1 and 2 beds on my estate. A few maisonettes and 3 & 4 bed houses too. Mix of terraces, semis and detached

You don't get that anymore, it's flats with high running costs or 4 bed houses

Surely building loads of 4 bed detached houses is more space inefficient than a row of 2 bed terraces?

 

[JKF]

This very good article from Sheffield Tribune highlights how leaseholds are often sold in large batches at auction, and how the system can be abused by unscrupulous characters.

A London lawyer bought hundreds of Sheffield freeholds. Then the ‘very aggressive’ letters arrived

Exclusive: The Tribune can reveal that Andrew Milne has threatened leaseholders with high court action. It ‘broke my heart’ one woman says

www.sheffieldtribune.co.uk

 

[35B]

My house is a 1 bed house, there are lots of 1 and 2 beds on my estate. A few maisonettes and 3 & 4 bed houses too. Mix of terraces, semis and detached

You don't get that anymore, it's flats with high running costs or 4 bed houses

Surely building loads of 4 bed detached houses is more space inefficient than a row of 2 bed terraces?

In terms of square foot per person, yes. But the economics mean that the price people will pay for a 4 bed detached is significantly greater than for a 2 bed terrace, which changes the economics of construction.

Additionally, new supply further up the market creates space in the market for people who want to trade up, meaning supply further down increases - all of which eases house price pressures.

 

[Peter Mugridge]

I'm in the early stages of buying a house and the solicitor has flagged a potential estate charge. We're still waiting to hear about the exact details of what it entails, but there's certainly some horror stories on the Internet. From what I've read the government are in the process of regulating the fees so they have to be fair and proportionate to any work to maintain the local area. At the moment it seems that numbers can be plucked out of thin air.

I'm not certain that the government reforms cover this particular aspect of fleecehold charges because the properties themselves are freehold.

I live in a development which is a mix of leasehold flats and freehold houses. Every property owner, both flats and houses, is a member of the company which manages the estate. We all meet up every year to decide the budget for next year. The budget includes things like re-surfacing car parks, gardening, adding new trees etc. Although the council looks after the roads the actual "fixtures and fittings" (so to speak) of the estate are managed and paid by us residents. So whilst, yes, the freehold house owners do have to contribute to the estate management fee, as members of the management company themselves they have a chance to shape the budget and decide what their money gets spent on.

In the case I mentioned, the individual residents have no say at all. The company simply pockets the fees and basically does nothing in return. It's legalised extortion.