As everybody knows, most of my work is in the commercial property field but this time I'm writing about residential for a change. I hope that I'm not treading on the feet of Damiano Rea in doing this and hopefully what I say will complement his article this month.
There will be many readers of this magazine who live in Leasehold properties, mainly flats and apartments but some in Leasehold houses also. Of those people, the majority will have no issues with the Freeholder who will be organising Insurance for the property, general communal maintenance and other matters which take a headache away from them. However, there is also a significant minority who will be suffering at the hands of rapacious Freeholders who see Leasehold as an extra source of revenue when developing a housing estate.
The first Act of Parliament to make major changes to the Leasehold system was the Leasehold Reform Act 1967. Later, the Leasehold Reform Housing and Urban Development Act 1993 gave Leaseholders the right to extend their leases on flats and to buy the Freehold of their ‘block’ if 50% or more agree. Why would people want to buy the headache from the Freeholders? For some people it is a way of getting more control and of course, lenders have always been reluctant to lend against short-term Leasehold residential property. However, with the rise of the new style Freeholder this need has become more important as the Leaseholders find themselves embroiled in time-consuming and very expensive litigation against Freeholders – often with little chance of success – to argue draconian terms in their property contract. Some housebuilders will sell the house Freehold but the gardens to the front and rear will be Leasehold. There will be a requirement to maintain these gardens but no right to change their use. Want to put an extra driveway on? You need permission – and that will cost. Haven’t maintained the gardens to a standard the Freeholder requires? They may send their own gardeners in – at your cost. Some of the Freehold titles include equally or more oppressive terms requiring regular redecoration, in a colour to be agreed with the Freeholder, and even just to get the consent to redecorate at the required time might cost. It’s all become incredibly nasty over the last 20 years or so.
There is new legislation due to come on the Statute Books this year, and under this, Leaseholds will be for a term of 990 years and so the urgent need to buy Freeholds before the expiry of the lease will become redundant. I imagine that there will be additional legislation brought into place in time to deal with the most swingeing terms in existing leases and to bring existing leases into line with new leases to be granted from the 2022 change.
However, if you are looking at buying a flat or a house, I suggest that you get full and proper advice from your solicitor and also from a competent professional surveyor. In the meantime, I would urge anybody having problems with service charges now, contact a solicitor or a surveyor without delay and get whichever you contact to put you in touch with the other professional. Together they can analyse your lease to see what is fair, what is unfair, and then challenge that for you. Your home is generally speaking your biggest investment, so it is in your interests to ensure you get the best advice with regard to it
