This leasehold scam

[franki68]

forget about the houses,it is obvious why there should not be a reason for freeholds on houses ,but why are they necessary on flats ?
No other country has a system like this ,and I have yet to see any remotely valid explanation as to why flats should be leasehold.
Maintenance ,insurance etc etc usually dealt with by the management company.

In other words why should leasehold/freeholds not be abolished full stop ?

[98elise]

Are you sure you understand what they are?

What would you propose instead of a leasehold (or similar) for a flat? As a leaseholder you can own part of the freehold so it doesn't have to be a separate person/entity.


Edited to add, if your proposing to abolish both, what do you propose to replace them with? freehold basically means you've bought the land and the buildings on it, what would replace that?

Edited by 98elise on Wednesday 26th July 13:30

[montecristo]

I haven't understood why leaseholds of any sort are a scam. Why can't the landowner just sell what he likes how he likes? If he wants to sell a house on condition that I dance for him every Sunday, surely it's just up to him and me whether we want to agree on that.

So what if leaseholds are a way of making more money, is that not how buying and selling things works?

I have a lease on my flat, but I was not scammed into it, I knew about it before I paid for it and was happy enough to make the deal.

[Ridgemont]

franki68 said:

forget about the houses,it is obvious why there should not be a reason for freeholds on houses ,but why are they necessary on flats ?
No other country has a system like this ,and I have yet to see any remotely valid explanation as to why flats should be leasehold.
Maintenance ,insurance etc etc usually dealt with by the management company.

In other words why should leasehold/freeholds not be abolished full stop ?

Other countries do have Leasehold agreements:
http://www.huffingtonpost.ca/atrina-kouroshnia/buy...


Other countries have arguably worse systems,

France for example has the concept of co-ownership for apartment dwellers. As can be imagined it is a legal nightmare:
https://www.french-property.com/news/french_proper...

The clue as to why they might be desirable for new builds is that they in theory remove the cost of the land from the sale value.

[franki68]

98elise said:

Are you sure you understand what they are?

What would you propose instead of a leasehold (or similar) for a flat? As a leaseholder you can own part of the freehold so it doesn't have to be a separate person/entity.


Edited to add, if your proposing to abolish both, what do you propose to replace them with? freehold basically means you've bought the land and the buildings on it, what would replace that?

Edited by 98elise on Wednesday 26th July 13:30

I understand what they are.
As far as I am aware all most properties in germany for example are freehold ,so how can they have freehold flats but we cannot ?

[jjlynn27]

Ridgemont said:

franki68 said:

forget about the houses,it is obvious why there should not be a reason for freeholds on houses ,but why are they necessary on flats ?
No other country has a system like this ,and I have yet to see any remotely valid explanation as to why flats should be leasehold.
Maintenance ,insurance etc etc usually dealt with by the management company.

In other words why should leasehold/freeholds not be abolished full stop ?

Other countries do have Leasehold agreements:
http://www.huffingtonpost.ca/atrina-kouroshnia/buy...


Other countries have arguably worse systems,

France for example has the concept of co-ownership for apartment dwellers. As can be imagined it is a legal nightmare:
https://www.french-property.com/news/french_proper...

The clue as to why they might be desirable for new builds is that they in theory remove the cost of the land from the sale value.

Don't have the time to look into Canada, but isn't French system same as share of freehold?

[loafer123]

The alternative system is already in existence and is called Commonhold.

It doesn't work well, as different Commonholders disagree over what should be done and who pays for it.

Common holds are virtually impossible to mortgage in the UK, so values are substantially below leasehold equivalents.

Leaseholds do work, and ground rents are fine, just not if they double every five years.

[TTwiggy]

franki68 said:

I understand what they are.
As far as I am aware all most properties in germany for example are freehold ,so how can they have freehold flats but we cannot ?

We can. At least we can have flats with a share of the freehold.

[anonymous-user]

franki68 said:

I understand what they are.
As far as I am aware all most properties in germany for example are freehold ,so how can they have freehold flats but we cannot ?

Conventionally the reason is that a freeholder has the absolute right to do what he wants with his land and the building on it. Inconvenient if the freehold owner of a third floor flat in a six story building decides that he wants to demolish it.

There are workarounds, and for many years there have been a vanishingly small number of "flying freehold" flats in this country. But generally speaking leaseholds of flats are an easier and better solution than flying freeholds.

AIUI most Germans rent their homes (see here, forex: http://www.crosschannellawyers.co.uk/legal-guide-t... Someone will own the freehold of a house or a block of flats, but that won't be the person residing there. Not sure what you mean about German "freehold flats" to be honest.

[franki68]

TTwiggy said:

We can. At least we can have flats with a share of the freehold.

yes good luck trying to do that ,do you know how hard it is ?

[TTwiggy]

franki68 said:

TTwiggy said:

We can. At least we can have flats with a share of the freehold.

yes good luck trying to do that ,do you know how hard it is ?

Not really. But it clearly isn't impossible as my GF owns a flat (in that London) with a share of the freehold.

[franki68]

TTwiggy said:

Not really. But it clearly isn't impossible as my GF owns a flat (in that London) with a share of the freehold.

its not impossible in some cases ,but for probably 95% of flat leaseholders I would say it is .The qualifying criteria make it very tough.

[Blue Oval84]

TTwiggy said:

franki68 said:

TTwiggy said:

We can. At least we can have flats with a share of the freehold.

yes good luck trying to do that ,do you know how hard it is ?

Not really. But it clearly isn't impossible as my GF owns a flat (in that London) with a share of the freehold.

As do my friends. Nightmare getting things done in the block though when everyone wants their say. The older residents blocked any service charge increases for so long that they ended up using the contingency fund to pay the electricity bill until there was nothing left in the pot.

Personally, I'd not be too keen on a share of freehold flat unless I knew damn well that it was being well managed, well maintained, and the other freeholders lived up to their responsibilities,

For me, leasehold works fine as there is one single entity for me to take to tribunal if I need to, and the laws are fairly robust about what they can and can't do. That said, my ground rent only doubles every 25 years, and it's only £150 per year at the moment...

[fido]

franki68 said:

The qualifying criteria make it very tough.

which one in particular?

[franki68]

I cant reply individually to all these posts but some people seem to mix up what the freeholder does and what the management company does.

[Mosdef]

franki68 said:

forget about the houses,it is obvious why there should not be a reason for freeholds on houses ,but why are they necessary on flats ?
No other country has a system like this ,and I have yet to see any remotely valid explanation as to why flats should be leasehold.
Maintenance ,insurance etc etc usually dealt with by the management company.

In other words why should leasehold/freeholds not be abolished full stop ?

Presumably it is cheaper to buy a leasehold property (it is in the commercial market), so what's the problem?

[Equus]

loafer123 said:

The alternative system is already in existence and is called Commonhold.

You can also do it by means of a flying freehold or 'Tyneside Flat' arrangement, but it's equally fraught with issues.

The current proposal in only out for consultation. It's a typical knee-jerk political response by people whose priority is to win votes, not understand problems; hopefully at least some degree of common sense will prevail in due course. If not, then we'll find ourselves with yet another half-arsed piece of legislation that suffers from unintended consequences.

[TTwiggy]

franki68 said:

I cant reply individually to all these posts but some people seem to mix up what the freeholder does and what the management company does.

I'm still uncertain if you understand what a leasehold is and what a freehold is. And I've also yet to see you explain what the 'scam' is. Someone has to own the land that a property sits on. Houses are (usually) easy as the land comes with the house, but flats are often developed on land owned by someone else (be it a private company, individual, local council or some other entity) and as such they 'rent' the land they are built on.

[franki68]

TTwiggy said:

I'm still uncertain if you understand what a leasehold is and what a freehold is. And I've also yet to see you explain what the 'scam' is. Someone has to own the land that a property sits on. Houses are (usually) easy as the land comes with the house, but flats are often developed on land owned by someone else (be it a private company, individual, local council or some other entity) and as such they 'rent' the land they are built on.

I understand perfectly,I own both ,I have expressed it badly,my main issue is more with freehold companies and the way they behave ,and the way leases have become more weighted to favour the freeholders and allow them to exploit the leaseholders more.

I have flats abroad as well ,they are not leasehold and they run perfectly smoothly ,hence the questions.

Edited by franki68 on Wednesday 26th July 15:35

[TTwiggy]

franki68 said:

I understand perfectly,I own both ,I have expressed it badly,my issue is more with freehold companies and the way they behave ,and the way leases have become more weighted to favour the freeholders and allow them to exploit the leaseholders more.

Sorry - I'm still not with you. When I had a leasehold property (Thames water owned the land) I never had any issue with the lease. It was 999 years and while it was £150 per year (compared to the £10 per year a friend in the same borough paid) There was never a problem with any aspect of it and I never felt 'exploited'. Now, the management company and service charges were a completely different matter.