/ Home & Energy

Is it time to loosen the leash on leaseholds?

Model homes in grass

Earlier this month the OFT confirmed its market study on ‘residential property management services’. But why could this innocuous sounding study be such important news for millions of consumers?

Well, the OFT’s inquiry is actually about the perils of owning leasehold property; something that affects many millions of English and Welsh consumers (leasehold as a form of ownership does not exist in Scotland, nor in any other EU nation). It’s such a complex area of law for consumers to navigate that the Government funds the Leasehold Advisory Service to support people with help and advice.

The Leasehold Knowledge Partnership estimates that there are currently more than five million leasehold properties in England and Wales which must mean there are many more millions of consumers affected.

And it is a growing sector: latest statistics suggest that around 40%, and an increasing number of new build developments, are sold on a leasehold basis. The number of consumers living in or owning leasehold property can only rise in future.

As leasehold property is often a flat in a larger block or new development, it isn’t surprising that first time buyers are particularly affected, especially in London and large metropolitan areas where house prices are very high. But owning leasehold property also affects other groups too.

Leaseholds vs Commonholds

These groups include anyone who has either exercised their right to buy their council home or has bought a former council property that is a flat or has shared estate facilities. We’ve been campaigning behind the scenes to ensure the market study covers these groups too – and the OFT has responded positively to our requests. Another affected group is older people living in sheltered retirement housing, a sector the OFT has already investigated.

So what exactly is the scope of the inquiry? We’ve asked the OFT to consider the ‘legal framework that underpins freehold and leasehold arrangements in England and Wales’. In other words, why property in England and Wales is still built and sold as leasehold when there is a more consumer friendly alternative – Commonhold. Commonhold has been a legal form of property ownership since 2004; in the 10 years since it is estimated there are just 100 commonhold properties in the whole of England and Wales.

The OFT has decided to focus its study on whether managing agents and freeholders have the same interests as leaseholders, whether leaseholders have sufficient influence on decisions taken by freeholders and whether there are barriers to switching.

It’ll also be looking at whether it works well in practice when leaseholders exercise their right to manage their own properties.

We’d like to hear your views – the pros and cons – of living in and/or owning leasehold property; we’ll be submitting your comments to the OFT in any additional response we make.

Comments
Guest
stephen says:
10 October 2015

I have just been informed that the builder who had my lease hold has just sold it to a company in London ,He did not inform us or given me chance to buy ,The problem now is getting in touch when I come to change my mortgage deal. Why would anybody buy the lease on a little house with 999 yrs and 100 pounds for the life

Guest

A simpler problem than most here, but what are the rights of the leaseholder if the freeholder is refusing to allow the installation of high speed broadband (internet) without reasoning and is forcing them to go with a broadband that runs far below their internet needs and will not be upgraded for atleast 6 months to superfast? I am asking for a friend who is having a real issue with this and needs more internet speed that is currently being allowed from the freeholder without any reasoning as of yet.