This leasehold scam
Discussion
Equus said:
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.
Normal leasehold ground rents on flats work fine, and that is not being changed.
TTwiggy said:
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.
just google issues with freeholders ,...the retired couple who wanted to put a conservatory on their house,the freeholder demanded £15000 to give them permission.
The owner of one of if not the biggest freeholding company in the uk going on record telling everyone how he charged the leaseholders at one site £300,000 for work that cost £150000.
Every bit of work or insurance etc they will take a kick back /commission on at the expense of the leaseholders.I personally saw insurance rates double in one year as a freeholder exercised its right to insure the building instead of the management company.
Just to clarify not all freeholders,I deal with freeholders like westminster council and they are fine ,but honestly I pity anyone who buys a flat where one of the big private companies owns the freehold.
One of them demands consent fees for subletting even though it has no right to ,on the basis that a lot of people will pay up without querying it.
Despite tier one tribunal rulings that certain fees cannot exceed certain amounts they ignore them and try it on constantly with less aware leaseholders.
Edited by franki68 on Wednesday 26th July 16:02
franki68 said:
just google issues with freeholders ,
...the retired couple who wanted to put a conservatory on their house,the freeholder demanded £15000 to give them permission.
The owner of one of if not the biggest freeholding company in the uk going on record telling everyone how he charged the leaseholders at one site £300,000 for work that cost £150000.
Every bit of work or insurance etc they will take a kick back /commission on at the expense of the leaseholders.
Right. Fine. Sorry. It's just that there was no link(s) in your OP so I really didn't know what you were talking about....the retired couple who wanted to put a conservatory on their house,the freeholder demanded £15000 to give them permission.
The owner of one of if not the biggest freeholding company in the uk going on record telling everyone how he charged the leaseholders at one site £300,000 for work that cost £150000.
Every bit of work or insurance etc they will take a kick back /commission on at the expense of the leaseholders.
franki68 said:
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
loafer123 said:
Equus said:
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.
Normal leasehold ground rents on flats work fine, and that is not being changed.
You seem to be pretty clued up on this malarkey. What is a normal leasehold/ground rent agreement in your eyes?.
franki68 said:
just google issues with freeholders ,
...the retired couple who wanted to put a conservatory on their house,the freeholder demanded £15000 to give them permission.
The owner of one of if not the biggest freeholding company in the uk going on record telling everyone how he charged the leaseholders at one site £300,000 for work that cost £150000.
Every bit of work or insurance etc they will take a kick back /commission on at the expense of the leaseholders.I personally saw insurance rates double in one year as a freeholder exercised its right to insure the building instead of the management company.
Just to clarify not all freeholders,I deal with freeholders like westminster council and they are fine ,but honestly I pity anyone who buys a flat where one of the big private companies owns the freehold.
One of them demands consent fees for subletting even though it has no right to ,on the basis that a lot of people will pay up without querying it.
Despite tier one tribunal rulings that certain fees cannot exceed certain amounts they ignore them and try it on constantly with less aware leaseholders.
Now I get you. We have similar setups at our place, the freehold owner appointed an agent to manage the ground rent and buildings insurance, as well as permission to let requests, sales info packs etc. Basically all the stuff they can charge for which involves little work....the retired couple who wanted to put a conservatory on their house,the freeholder demanded £15000 to give them permission.
The owner of one of if not the biggest freeholding company in the uk going on record telling everyone how he charged the leaseholders at one site £300,000 for work that cost £150000.
Every bit of work or insurance etc they will take a kick back /commission on at the expense of the leaseholders.I personally saw insurance rates double in one year as a freeholder exercised its right to insure the building instead of the management company.
Just to clarify not all freeholders,I deal with freeholders like westminster council and they are fine ,but honestly I pity anyone who buys a flat where one of the big private companies owns the freehold.
One of them demands consent fees for subletting even though it has no right to ,on the basis that a lot of people will pay up without querying it.
Despite tier one tribunal rulings that certain fees cannot exceed certain amounts they ignore them and try it on constantly with less aware leaseholders.
Edited by franki68 on Wednesday 26th July 16:02
Handily, they own the Ltd company that does this work. The buildings cover is over £800 per flat pet year now, I imagine a good chunk of that is a nice kickback.
The Ltd that manages the insurance on behalf of the Ltd that owns the freeholds even tried charging us £20 each for setting up the policy, despite the Ltd company that owns the freehold being legally obliged to set up a policy of insurance. They don't charge me anymore after I pointed out that the charge wasn't valid even according to their own statement of rights.
Anything remotely messy, such as dealing with damp, cleaners, gardeners, general maintenance is all farmed out to a genuinely independent managing agent as the hassle is high and commission is relatively low. This means each year we get four sets of bills-
1) Service charge - independent agent
2) Ground rent - agent who is owned by freeholder
3) Buildings insurance - as above
4) Any extra bills for one off repairs etc. - independent agent
It actually piss me off, but I'd rather have the mild exploitation from the freeholder than have a disastrous "share of freehold" arrangement. Almost half the flats are owned by landlords, so you can imagine what chance we'd have in getting agreement to proceed with maintenance works if it was share of freehold!
Even as leaseholders a few of us have had to demand the common parts are redecorated this year as the agents were reluctant to do it, they said it's been an expensive year for major works so they wanted to be fair to all leaseholders. The ones of us who actually want the block keeping nice have had to insist that they do what the lease says (decorate the block) and to hell with the extra bill on top of the service charge. If it was share of freehold we'd have no chance of getting it done.
anonymous said:
[redacted]
Here's the thing, you use the conveyancing solicitors naively who omit to mention that the clauses are onerous in the lease. On top of that you are told by XX housebuilder that you'll be able to buy the freehold after the two statutory timeframe. However at the two year point you discover that the freehold has been sold off to a shell company in Guernsey. It then costs you £108 just to get a figure of 20x the original freehold cost to buy it.Granted there are naive people who trusted the solicitors/estate agents/home builders etc not to pull a stunt like this. Life lesson? Of course it is!. TBH the only reason it's starting to hit the fan is because people got greedy and it's finally caught the attention of the government.
Edited by Matt p on Wednesday 26th July 16:43
fblm 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 ? Surely the conversation goes like this ?
You : "Hello, I'd like to buy this new house please"
Builder : "Certainly, get your solicitor to sort it for you".
You : "Thanks"
Your solicitor : "You do understand you are not buying the freehold on this house ? i.e. it's leasehold, like a flat"
You : "Hello, is that the builder ? yes ? good. You can stick your house up your arse thanks, I shall be spending my money elsewhere. Good day to you"
You : "Hello, I'd like to buy this new house please"
Builder : "Certainly, get your solicitor to sort it for you".
You : "Thanks"
Your solicitor : "You do understand you are not buying the freehold on this house ? i.e. it's leasehold, like a flat"
You : "Hello, is that the builder ? yes ? good. You can stick your house up your arse thanks, I shall be spending my money elsewhere. Good day to you"
Matt p said:
loafer123 said:
Equus said:
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.
Normal leasehold ground rents on flats work fine, and that is not being changed.
You seem to be pretty clued up on this malarkey. What is a normal leasehold/ground rent agreement in your eyes?.
The reason that this has happened is that large housebuilders have done ground rents that are, say £500 per annum rising every 5 years by compounded inflation. Those might be worth £15-30k to a specialist annuity buyer, so it is real profit for them.
loafer123 said:
Matt p said:
loafer123 said:
Equus said:
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.
Normal leasehold ground rents on flats work fine, and that is not being changed.
You seem to be pretty clued up on this malarkey. What is a normal leasehold/ground rent agreement in your eyes?.
The reason that this has happened is that large housebuilders have done ground rents that are, say £500 per annum rising every 5 years by compounded inflation. Those might be worth £15-30k to a specialist annuity buyer, so it is real profit for them.
Randy Winkman said:
Whether is's a flat or a house there is no reason for a separate entity to own the freehold. It's just a way of exploiting limited supply. Even in a flat there is no problem with the flat owners jointly owning the freehold and having control of the terms of the lease. They have to get maintenance work done and pay for it anyway. They might as well be in control of it.
No, they don't. The residents in a share of freehold can effectively vote to not do the work that's really needed to keep the building in good condition. Turkeys don't always vote for Christmas.See my earlier post above about my friends block where the "share of freehold" residents group decided it wasn't fair on people to pay more service charge, ultimately resulting in the residents account running dry after they used all the reserve fund just paying the electricity bills.
More sensible residents could see the problem, but when most others don't there is little they can do. In the end my friends ended up as directors of the residents association and got things back on track by encouraging everyone to vote for an increase in the charges (by pointing out that there was no money left to fix the communal boiler).
For their trouble, they are now director of a company and have to dick about with things like arranging lift maintenance, dealing with gardeners, balancing the books, communal utility bills, arranging dry riser testing, it's never ending fun.
In a flat, I'd be extremely reluctant to ever go share of freehold unless I was hugely confident that an overwhelming majority of the other residents have good funds and a willingness to maintain their home. At least with a leasehold I can enforce the terms of my lease through a tribunal and collecting the money becomes the freeholder's problem.
snuffy said:
Surely the conversation goes like this ?
You : "Hello, I'd like to buy this new house please"
Builder : "Certainly, get your solicitor to sort it for you".
You : "Thanks"
Your solicitor : "You do understand you are not buying the freehold on this house ? i.e. it's leasehold, like a flat"
You : "Hello, is that the builder ? yes ? good. You can stick your house up your arse thanks, I shall be spending my money elsewhere. Good day to you"
Not quite as simple as that as some had payed a non refundable "reservation fee" before the leasehold structure had been told to them.You : "Hello, I'd like to buy this new house please"
Builder : "Certainly, get your solicitor to sort it for you".
You : "Thanks"
Your solicitor : "You do understand you are not buying the freehold on this house ? i.e. it's leasehold, like a flat"
You : "Hello, is that the builder ? yes ? good. You can stick your house up your arse thanks, I shall be spending my money elsewhere. Good day to you"
There is little excuse beyond gouging the public to be selling a leasehold house. Flats are a different matter but the leases shouldn't be exploitative.
JagLover said:
snuffy said:
Surely the conversation goes like this ?
You : "Hello, I'd like to buy this new house please"
Builder : "Certainly, get your solicitor to sort it for you".
You : "Thanks"
Your solicitor : "You do understand you are not buying the freehold on this house ? i.e. it's leasehold, like a flat"
You : "Hello, is that the builder ? yes ? good. You can stick your house up your arse thanks, I shall be spending my money elsewhere. Good day to you"
Not quite as simple as that as some had payed a non refundable "reservation fee" before the leasehold structure had been told to them.You : "Hello, I'd like to buy this new house please"
Builder : "Certainly, get your solicitor to sort it for you".
You : "Thanks"
Your solicitor : "You do understand you are not buying the freehold on this house ? i.e. it's leasehold, like a flat"
You : "Hello, is that the builder ? yes ? good. You can stick your house up your arse thanks, I shall be spending my money elsewhere. Good day to you"
There is little excuse beyond gouging the public to be selling a leasehold house. Flats are a different matter but the leases shouldn't be exploitative.
It is as simple as that.
Don't give anybody a non-refundable deposit for anything, anywhere, ever.
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