Help! I’m trapped in a leasehold flat...

[dryrot]

Spectator 8/12/23

https://www.spectator.co.uk/article/help-im-trapped-in-a-leasehold/

Generation Rent, we are always being told, are fed up of having to pay ‘dead’ money to their landlords. The rate of home ownership among 35- to 44-year-olds plunged from 74 per cent in 2003 to 56 per cent in 2019. But no one should think they will necessarily be better off, or feel more in control of their destiny, if they succeed in taking the plunge and buying a home. They could end up like me.

Notionally, I have become a home owner by virtue of buying a one-bedroom flat in an ‘affordable housing’ scheme in Wandsworth, south London. Yet I feel more like a serf who must pay an exorbitant annual tithe to her feudal overlord. In common with the ‘owners’ of Britain’s other 4.6 million leasehold properties, I will never actually own my property. The lease I bought is really just a long rental contract. The difference between this and the shorthold tenancies which govern
most private rentals is that we, the leaseholders, have to stump up the cost of maintaining the building through ‘service charges’, levied on us by a management company employed by the freeholder. We also have to pay annual ‘ground rent’. The freeholder, not the leaseholder, decides which contractors to employ. We just get the invoice.

I feel more like a serf who must pay an exorbitant annual tithe to her feudal overlord

The Leasehold and Freehold Reform Bill, presented in parliament last week, promises to make life better for leaseholders. I ought to be full of hope. After all, in 2018, Rishi Sunak – then a local government minister – called leasehold a ‘scam’. But I am not holding my breath.

The proposals have already been watered down. When they were first put forward, the government was promising to abolish the leasehold system altogether, or at least to ban the sale of new apartment developments as leasehold. Instead, blocks would have to be ‘commonhold’ – an arrangement whereby the owners of individual flats jointly own the whole building. But that proposal has been ditched, leaving only a promise to cap ground rents and a few other measures to make it easier for groups of leaseholders to club together and buy their freehold. How much of this will actually make it into an act of parliament is debatable. Freeholders are a powerful vested interest and have been squashing proper reforms since 1909, when Lloyd George declared that leasehold ‘is not business, it is blackmail’.

Here’s how leasehold ownership has worked for me. When I bought my flat in 2013, it seemed to promise a future of financial freedom from landlords. I was nearly prostrate with gratitude. The property was one of 29 shared ownership homes built by the developer St George (part of the Berkeley Group) and sold to key workers and local first-time buyers through Notting Hill Housing (now Notting Hill Genesis). The homes were advertised by Wandsworth council and backed by then London mayor Boris Johnson.

But I didn’t really escape the clutches of rapacious landlords. On the contrary, I have two of them: St George, which owns the freehold, and Notting Hill, which owns the ‘head lease’ (I am not even the proper leaseholder, but am subject to an under-lease). Now unlike the tenant I was in my previous home, I can’t just pack my bags and leave if my landlord jacks up the rent. I must pay whatever the managing agents demand, until such time as I can manage to sell the lease.

The first big sign of trouble came in 2016, when the service charge doubled overnight. Had it started out at that level I wouldn’t have been able to take out a mortgage – my bank would have balked at my monthly outgoings. It was hardly as if we were getting a better service for our money from the managing agent, Rendall & Rittner. There are system failures, floods, car thefts and broken intercoms across the entire development. Efforts by me and my neighbours to find out why we had been charged so much went unanswered for two years.

Finally, in 2018, we were told, by Notting Hill, that St George had made ‘a mistake’ when designing our building. Like many London developments with an ‘affordable homes’ remit, the property was supposed to be split into two separate parts, with a ‘poor door’ segregating those who could afford homes on the open market and those in shared-ownership with a housing association. Unfortunately, however, St George did not build two entrances for their/our building – instead they built one. The rich folk could enter through our building’s front door, use our lifts and walk up to their apartments through our fire escape. Or they could enter via the doors and lifts in an adjacent block, which was constructed five years before ours. In 2015-16, two years after selling our building off, the landlord decided that only the shared-owners should shoulder the entire financial burden for maintaining its sole entrance, its vestibule, lifts and fire escape. As a result, our affordable homes were suddenly paying service charges as high as £4.61 per square foot while owners of the elite apartments in the adjacent building (its penthouse was on the market for £7.25 million the same year our apartments were sold off for less than £400,000) paid just £1.42.

My neighbours and I did not imagine that this could be lawful so we spent the next two years running around seeking legal services provided by the state, our MP, the new mayor and Wandsworth council, none of whom could help. So we pooled our resources and hired a solicitor. She told us that what St George was doing was indeed within its legal rights. Service charges are calculated according to impenetrable percentages in the ‘head lease’ between St George and Notting Hill – a lease we were not party to. According to our solicitor, the service charge was falsely stated in the marketing materials and in price stipulations, which our solicitors and mortgage providers had believed when we bought the properties.

 

She told us that, legally, service charges must be ‘fair’, ‘in proper proportion’ and ‘reasonable’. She advised us to take the issue to a First-tier Tribunal – a kind of court convened to settle disputes between freeholders and leaseholders – and essentially throw ourselves on the mercy of the judge, arguing that it simply isn’t ‘reasonable’ to make NHS bladder nurses pay higher ‘internal block costs’ than multimillionaires in the very same building.

We lost the case and found ourselves saddled with the freeholder’s £45,000 legal bill. And last Christmas we suffered another blow: the managing agents informed us that they were hiking the service charges by another 40 per cent because of energy prices. In order to cut these projected costs, they made two concierge workers redundant, further reducing the standard of service we are getting for our service charges. It was only thanks to one of the redundant workers sniffing smoke that a serious fire had been prevented. The fire alarm system, like so many things, was defective.

My neighbours with modest two-bedroom homes are now paying more than £7,000 a year in service charges – a sum beyond the means of the lecturers, NHS workers and other modestly paid families who live here. So much for ‘affordable’ homes.

Margaret Thatcher’s great ‘home-owning democracy’ isn’t working for leaseholders. Sunak’s government would be well-advised to note that Wandsworth, once the Iron Lady’s favourite council, thanks to its low tax and home-ownership promotion policies, turned Labour last year after 44 years. If the Tories want any sort of future in London, they would be minded to start prioritising the voters who live in leasehold homes, rather than the developers who build and, ultimately, own them.

[winkie]

Too long......not the lease.

[Dweller]

32 minutes ago, dryrot said:

Spectator 8/12/23

https://www.spectator.co.uk/article/help-im-trapped-in-a-leasehold/

Generation Rent, we are always being told, are fed up of having to pay ‘dead’ money to their landlords. The rate of home ownership among 35- to 44-year-olds plunged from 74 per cent in 2003 to 56 per cent in 2019. But no one should think they will necessarily be better off, or feel more in control of their destiny, if they succeed in taking the plunge and buying a home. They could end up like me.

Notionally, I have become a home owner by virtue of buying a one-bedroom flat in an ‘affordable housing’ scheme in Wandsworth, south London. Yet I feel more like a serf who must pay an exorbitant annual tithe to her feudal overlord. In common with the ‘owners’ of Britain’s other 4.6 million leasehold properties, I will never actually own my property. The lease I bought is really just a long rental contract. The difference between this and the shorthold tenancies which govern
most private rentals is that we, the leaseholders, have to stump up the cost of maintaining the building through ‘service charges’, levied on us by a management company employed by the freeholder. We also have to pay annual ‘ground rent’. The freeholder, not the leaseholder, decides which contractors to employ. We just get the invoice.

I feel more like a serf who must pay an exorbitant annual tithe to her feudal overlord

The Leasehold and Freehold Reform Bill, presented in parliament last week, promises to make life better for leaseholders. I ought to be full of hope. After all, in 2018, Rishi Sunak – then a local government minister – called leasehold a ‘scam’. But I am not holding my breath.

The proposals have already been watered down. When they were first put forward, the government was promising to abolish the leasehold system altogether, or at least to ban the sale of new apartment developments as leasehold. Instead, blocks would have to be ‘commonhold’ – an arrangement whereby the owners of individual flats jointly own the whole building. But that proposal has been ditched, leaving only a promise to cap ground rents and a few other measures to make it easier for groups of leaseholders to club together and buy their freehold. How much of this will actually make it into an act of parliament is debatable. Freeholders are a powerful vested interest and have been squashing proper reforms since 1909, when Lloyd George declared that leasehold ‘is not business, it is blackmail’.

Here’s how leasehold ownership has worked for me. When I bought my flat in 2013, it seemed to promise a future of financial freedom from landlords. I was nearly prostrate with gratitude. The property was one of 29 shared ownership homes built by the developer St George (part of the Berkeley Group) and sold to key workers and local first-time buyers through Notting Hill Housing (now Notting Hill Genesis). The homes were advertised by Wandsworth council and backed by then London mayor Boris Johnson.

But I didn’t really escape the clutches of rapacious landlords. On the contrary, I have two of them: St George, which owns the freehold, and Notting Hill, which owns the ‘head lease’ (I am not even the proper leaseholder, but am subject to an under-lease). Now unlike the tenant I was in my previous home, I can’t just pack my bags and leave if my landlord jacks up the rent. I must pay whatever the managing agents demand, until such time as I can manage to sell the lease.

The first big sign of trouble came in 2016, when the service charge doubled overnight. Had it started out at that level I wouldn’t have been able to take out a mortgage – my bank would have balked at my monthly outgoings. It was hardly as if we were getting a better service for our money from the managing agent, Rendall & Rittner. There are system failures, floods, car thefts and broken intercoms across the entire development. Efforts by me and my neighbours to find out why we had been charged so much went unanswered for two years.

Finally, in 2018, we were told, by Notting Hill, that St George had made ‘a mistake’ when designing our building. Like many London developments with an ‘affordable homes’ remit, the property was supposed to be split into two separate parts, with a ‘poor door’ segregating those who could afford homes on the open market and those in shared-ownership with a housing association. Unfortunately, however, St George did not build two entrances for their/our building – instead they built one. The rich folk could enter through our building’s front door, use our lifts and walk up to their apartments through our fire escape. Or they could enter via the doors and lifts in an adjacent block, which was constructed five years before ours. In 2015-16, two years after selling our building off, the landlord decided that only the shared-owners should shoulder the entire financial burden for maintaining its sole entrance, its vestibule, lifts and fire escape. As a result, our affordable homes were suddenly paying service charges as high as £4.61 per square foot while owners of the elite apartments in the adjacent building (its penthouse was on the market for £7.25 million the same year our apartments were sold off for less than £400,000) paid just £1.42.

My neighbours and I did not imagine that this could be lawful so we spent the next two years running around seeking legal services provided by the state, our MP, the new mayor and Wandsworth council, none of whom could help. So we pooled our resources and hired a solicitor. She told us that what St George was doing was indeed within its legal rights. Service charges are calculated according to impenetrable percentages in the ‘head lease’ between St George and Notting Hill – a lease we were not party to. According to our solicitor, the service charge was falsely stated in the marketing materials and in price stipulations, which our solicitors and mortgage providers had believed when we bought the properties.

 

She told us that, legally, service charges must be ‘fair’, ‘in proper proportion’ and ‘reasonable’. She advised us to take the issue to a First-tier Tribunal – a kind of court convened to settle disputes between freeholders and leaseholders – and essentially throw ourselves on the mercy of the judge, arguing that it simply isn’t ‘reasonable’ to make NHS bladder nurses pay higher ‘internal block costs’ than multimillionaires in the very same building.

We lost the case and found ourselves saddled with the freeholder’s £45,000 legal bill. And last Christmas we suffered another blow: the managing agents informed us that they were hiking the service charges by another 40 per cent because of energy prices. In order to cut these projected costs, they made two concierge workers redundant, further reducing the standard of service we are getting for our service charges. It was only thanks to one of the redundant workers sniffing smoke that a serious fire had been prevented. The fire alarm system, like so many things, was defective.

My neighbours with modest two-bedroom homes are now paying more than £7,000 a year in service charges – a sum beyond the means of the lecturers, NHS workers and other modestly paid families who live here. So much for ‘affordable’ homes.

Margaret Thatcher’s great ‘home-owning democracy’ isn’t working for leaseholders. Sunak’s government would be well-advised to note that Wandsworth, once the Iron Lady’s favourite council, thanks to its low tax and home-ownership promotion policies, turned Labour last year after 44 years. If the Tories want any sort of future in London, they would be minded to start prioritising the voters who live in leasehold homes, rather than the developers who build and, ultimately, own them.

 

My heart goes out to these poor people. I have been there with a leasehold property and also with a freehold management company doubling /tripling management charges every year whilst not doing any maintenance. Total nightmare for them. My situation now isn't much better with neighbours from hell living next door with very deep pockets for legal costs whilst we haven't and not many can afford £400+ vat an hour for solicitors. Shared ownership means they don't even own the lease can't see any bill passing through parliament is going to help them. From what I can remember if there are over 3 or 5 people in a leasehold block they can get together and buy the freehold and become shared freeholders and take  over the management and the freeholder has to sell. However, I guess if they only part own their properties and don't even own the lease the rules are different. Buying a share of the freehold is the only option really for people being held to ransom in blocks of flats but it doesn't make the building any less to manage! 

Edited December 15, 2023 by Dweller

[Housepricecrash91]

Yep, leasehold flats are a terrible idea. Unfortunately service charges are getting out of hand due to hikes in insurance, greedy management agents, and other issues. The owner has no control over any of this, but will find themselves picking up the full bill.

What's alarming is that the management company can literally decide to do work to the building and flat owners get no say in the cost, who does the work, they literally just get sent the extortionate bill to pay and threatening emails demanding payment.

What a joke!

[Orb]

8 minutes ago, Housepricecrash91 said:

Yep, leasehold flats are a terrible idea. Unfortunately service charges are getting out of hand due to hikes in insurance, greedy management agents, and other issues. The owner has no control over any of this, but will find themselves picking up the full bill.

What's alarming is that the management company can literally decide to do work to the building and flat owners get no say in the cost, who does the work, they literally just get sent the extortionate bill to pay and threatening emails demanding payment.

What a joke!

That's the terrifying thing. There are no end of flats in my town I could buy at full asking. But the monthly charges are a huge psychological barrier that's hard, if not impossible, to cross. It would feel like robbery paying those awful charges every month, never relaxing in case a letter drops through the door doubling them. I really feel sorry for anybody stuck in leasehold flats. 

There's a large static home holiday park near me where lots of people live. Residents are up in arms at the moment because the new owners more or less added 50% to the annual site fees. I think they're around £6.5k now, and you can't live there for the whole twelve months. There's almost no decent way to live with financial moderation anymore. 

[Maghull Mike]

Get a job overseas................leave, no warning...just go

Mike

[nero120]

My god.

If these people decided to band together into a lunch mob and hang these rentier scum from the nearest lamp post I don't think many would blame them.

The people of this country will never thrive until these establishment rentier scum are run through.

[shlomo]

My neighbours with modest two-bedroom homes are now paying more than £7,000 a year in service charges – a sum beyond the means of the lecturers, NHS workers and other modestly paid families who live here. So much for ‘affordable’ homes.

[Maghull Mike]

You think your got problems mate!

https://nitter.net/chrisyelland/status/1735683586840236400#m

[Dweller]

11 minutes ago, Maghull Mike said:

You think your got problems mate!

https://nitter.net/chrisyelland/status/1735683586840236400#m

Wow just in case anyone wants to catch up on what has been going on at HP this was the situation in 2017!!
https://www.theguardian.com/news/2017/dec/21/hinkley-point-c-dreadful-deal-behind-worlds-most-expensive-power-plant?fbclid=IwAR0mHceke_KepMVT122O-E4fwwcc77XVaLlWYxcOhDQstmE7--AYS6dWIVE
Whatever the potential costs, for EDF and the British government, CGN’s involvement may have been essential to the viability of the whole project. The UK was in a bad negotiating position, as it seems likely it could not do without Chinese expertise in building the Hinkley reactor. “There is an argument that this reactor is essentially unbuildable,” said Tom Burke, the energy policy expert. EDF says several reactors of this kind are close to completion in other sites around the world, and that construction at Hinkley is making great progress.

If anyone can do it, it is the Chinese, who have established themselves as world leaders in the complex engineering challenges involved in building nuclear power plants. (There were 20 reactors under construction in China at the end of March 2017.) One of the central challenges is pouring the concrete – 3m tonnes in total – needed to build not only the massive foundations but also the vast biological shield around the reactor, which reduces the radiation to levels safe for humans. “You’d think it was straightforward, pouring concrete, but it’s actually quite touchy-feely, and doesn’t always go as you’d like,” said one source with knowledge of the build. “The Chinese are very, very good at pouring concrete.”

Edited December 15, 2023 by Dweller

[iamnumerate]

4 hours ago, Housepricecrash91 said:

Yep, leasehold flats are a terrible idea. Unfortunately service charges are getting out of hand due to hikes in insurance, greedy management agents, and other issues. The owner has no control over any of this, but will find themselves picking up the full bill.

What's alarming is that the management company can literally decide to do work to the building and flat owners get no say in the cost, who does the work, they literally just get sent the extortionate bill to pay and threatening emails demanding payment.

What a joke!

Actually this is shared ownership - even worse than normal leasehold

[micawber]

12 hours ago, nero120 said:

If these people decided to band together into a lunch mob and hang these rentier scum from the nearest lamp post I don't think many would blame them.

Ah!  So that's where the phrase "in a bit of a pickle" comes from.

[nero120]

34 minutes ago, micawber said:

Ah!  So that's where the phrase "in a bit of a pickle" comes from.

Haha!! 

Bloody autocorrect!

[Trampa501]

12 hours ago, shlomo said:

My neighbours with modest two-bedroom homes are now paying more than £7,000 a year in service charges – a sum beyond the means of the lecturers, NHS workers and other modestly paid families who live here. So much for ‘affordable’ homes.

It's a huge crime, isn't it? It'd be nice to think that the true instigators behind this will pay at some point.

[shlomo]

5 minutes ago, Trampa501 said:

It's a huge crime, isn't it? It'd be nice to think that the true instigators behind this will pay at some point.

It makes you realise making the wrong financial decision will impact you forever, information in the public domain is buy a house, renting is dead money, the quote that comes to mind ‘a little information is dangerous’

[Trampa501]

2 minutes ago, shlomo said:

It makes you realise making the wrong financial decision will impact you forever, information in the public domain is buy a house, renting is dead money, the quote that comes to mind ‘a little information is dangerous’

Yes, it used to be said "you can't go wrong with bricks and mortar". If you're buying a flat leasehold, you're not really buying "bricks and mortar", merely renting the space within. 

[shlomo]

Just now, Trampa501 said:

Yes, it used to be said "you can't go wrong with bricks and mortar". If you're buying a flat leasehold, you're not really buying "bricks and mortar", merely renting the space within. 

I cannot see a way out for these people 

[Sn50 Coif]

2 hours ago, shlomo said:

I cannot see a way out for these people 

As far as I see it bankruptcy - sooner rather than later - makes sense for a lot of such people. As i understand it the UK is very lenient therein.

That said, it is not something I've ever needed to personally consider, so perhaps I'm wrong!

[shlomo]

11 minutes ago, Sn50 Coif said:

As far as I see it bankruptcy - sooner rather than later - makes sense for a lot of such people. As i understand it the UK is very lenient therein.

That said, it is not something I've ever needed to personally consider, so perhaps I'm wrong!

Let’s be honest these people will never be able to buy a house that window has now closed they will be forever tenants, a new version of poor 

[coypondboy]

 

[MARTINX9]

19 hours ago, Housepricecrash91 said:

Yep, leasehold flats are a terrible idea. Unfortunately service charges are getting out of hand due to hikes in insurance, greedy management agents, and other issues. The owner has no control over any of this, but will find themselves picking up the full bill.

What's alarming is that the management company can literally decide to do work to the building and flat owners get no say in the cost, who does the work, they literally just get sent the extortionate bill to pay and threatening emails demanding payment.

What a joke!

Even worse in shared ownership where you have to pay 100 per cent of the service charge and building repairs - but may own only a 25 per cent share. But if you can't pay your subsidised rent part - even if you have paid off your 25 per cent mortgage - your housing association can in theory confiscate the entire flat and chuck you out and you don't even get the 25 per cent equity back. Because its a legally just an expensive lease!

You won't be happy and you will own nothing!!

[Orb]

3 minutes ago, MARTINX9 said:

 even if you have paid off your 25 per cent mortgage - your housing association can in theory confiscate the entire flat and chuck you out and you don't even get the 25 per cent equity back.

Wait.. what? Is that definitely true? Surely that's pure theft?

[PeanutButter]

What happens if they just don’t pay?

[MARTINX9]

2 hours ago, Orb said:

Wait.. what? Is that definitely true? Surely that's pure theft?

 

That is the legal position yes under schedule 2 of the 1988 Housing Act. Just like any freeholder/landlord can evict a leaseholder if they don't pay what they owe.

Its at the discretion of the housing association - they do of course need to go through formal eviction processes to get you out as with any other tenants. Most - as they are charities - will for PR purposes agree some mitigation - but legally they don't have to. If there is a mortgage outstanding on the 'owned' share the bank might of course intervene legally to ensure they get paid.

https://www.housing.org.uk/our-work/affordable-home-ownership/shared-ownership/shared-ownership-campaign-faqs/can-shared-owners-lose-all-of-their-investment-in-their-home-if-they-dont-pay-their-rent/

 

https://www.sharedownershipresources.org/need-to-know/shared-ownership-is-it-really-ownership/

Edited December 16, 2023 by MARTINX9

[Housepricecrash91]

41 minutes ago, PeanutButter said:

What happens if they just don’t pay?

Breach of lease, and taken to court I imagine. Then 'your' home is taken from you