- By Phil Hendry
- Senior producer, BBC News
“I wouldn’t touch leasehold, and I wish I never had,” words born of bitter experience by Liz Winstanley.
She bought her two-bed leasehold flat in Manchester in 2018. When Storm Eunice battered Britain two years ago, the roof of her top floor apartment started to leak badly.
“Rain was coming down through the light sockets and through the switches,” she said.
Most homeowners would try to get someone in as soon as possible to identify the leaks and get the problem fixed via a claim on their buildings insurance.
But because Liz’s flat is leasehold, she had to rely on a managing agent to sort things out. She said after many calls and e-mails the first attempt to stem the flow failed. Mould started to grow in the increasingly sodden flat.
Liz had to move out – she pleaded with the managing agent – FirstPort- to find her suitable temporary accommodation, and eventually they did.
“It was in a dodgy area of Salford,” said Liz. “There were parties all the time, and drug use in the block. One day they found a dead body. I couldn’t stay there, I didn’t feel safe.”
Liz finally moved back home this month.
FirstPort told the BBC it recognised residents like Liz had faced a significant challenge, but it said that the delays were caused by the problem being more structural than first thought and due to an inherent defect in the roof’s construction.
Poor communication, inadequate repairs and unjustified service charges are common complaints from the estimated five million people who own their properties as leasehold.
Leasehold dates back hundreds of years – before women even had the right to own property – to a time of lords and landowners, peasants and serfs. Campaigners against leasehold say it should be abolished, it is feudal and unfair, allowing freeholders – who in effect own the land flats and some houses are built on – to extract money from leaseholders via managing agents.
The government agrees there is unfairness. Housing secretary Michael Gove has called some of those operating in the leasehold sector “bandits”.
This week, the Leasehold and Freehold (Reform) Bill is being debated in Parliament. The government says it will give leaseholders like Liz an easier and less costly route to getting legal redress. It will call for greater transparency to justify the service charges levied – but not to cap them – and will make new leases a standard 990 years – rather than the current 99 or 125 years.
Mr Gove rejects the calls for complete abolition of the leasehold system, saying legally it is “knottingly complex”. He also resists suggestions the government has given in to lobbying from those with vested interests who profit from the current set-up.
“Making sure the room for exploitation is squeezed is critical,” says Mr Gove. “The real challenge with abolishing leasehold with the stroke of a pen is the complexity of the English legal system.”
But Scotland managed to do so 20 years ago, which means aside from a handful of properties in Northern Ireland, England and Wales are now the only countries in the world where leasehold is still widely used.
Anti-leasehold campaigners say Mr Gove’s legislative efforts don’t go far enough.
“Leaseholders want full control over the homes they’ve bought , their services charges and ultimately as a result, their lives,” says campaigner Harry Scoffin.
“What the government is proposing is transparency over those costs. The problem is we’re going to find out how much we’re being ripped off by, but the rip-offs won’t stop”.
Harry’s mother Anna says she feels exploited. Service charges for her flat in London’s Canary Wharf went up 40% in the last two years , she says, to over £33,000 a year.
“I feel like my freeholder can dip his hand into my bank account whenever he wants and the system allows him to do it,” said Anna.
She says some owners in her block have resorted to selling their flats at auction at knock-down prices to avoid the charges.
The newly-appointed managing agents of Anna’s buildings told me they are carrying out a review of service charge levels in conjunction with the building’s freeholder – a billionaire businessman.
A leading London estate agent also suggests the government’s efforts to reform the leasehold system for people like Liz and Anna don’t go far enough.
Steven Herd of MyLondonHome.com said abolishing leasehold and replacing it with commonhold – a system that would allow homeowners to collectively either manage their own apartment blocks or appoint a managing agent of their choice – rather than the freeholder’s- would be give flat owners power over their own buildings.
Mr Herd says people, especially younger first-time buyers – who make up half of leasehold purchases – are becoming increasingly aware of the pitfalls of the leasehold system.
“People who are seeing their service charges double with no perceived increase in service or amenity believe that it’s a toxic market,” he added.
