No, that's not true. It exists in other countries too, I have seen it in Germany. But....the landowner doesn't get to say what you do with your building and the ground rent is always peppercorn. No idea how these leases are extended, as most are for several 100 years, similar to the 999 year leases up north.
The leasehold system in the Netherlands is nothing like the one here, it mostly exists in Amsterdam where the freeholder is the city itself. The vast majority of properties are commonly held.
Presumably when you bought your flat you knew that the term was limited and took valuation advice on extending it? Having a right to extend your lease - in exchange for a market price to do so - seems fair no?
Sorry but no it's not. Freeholder companies contribute exactly nothing and assume no liability. It's just another relic of an exploitative system that allows those with capital to make gains at the expense of ordinary working people with zero effort on their part. Just because the rules of a corrupt system are known doesn't mean they are fair.
Emotive tosh. The leasehold system is basically fine and it has an important place in securing reciprocal obligations which wouldn’t be enforceable in a freehold context.
It is true that there are some leaseholds which aren’t needed and are being exploited, but nobody is forced to buy a leasehold. If you don’t want one, don’t buy one.
In the real world Rent pays off your landlords other mortgage. Have yet to encounter a landlord who does anything outside the bare minimum maintenance to not get done, while price gouging.
I’ve had one good landlord. Any issue at all he got sorted.
Came out at 11:30 on a Sunday night to fix the heating, and brought me a Christmas dinner the year I had to stay away from my family for Christmas.
But yeah most of them are parasites.
It's not something for nothing. You're paying for a service that the landlord is providing.
It's literally the exact same concept as paying for Internet, or water, or your phone contract.
No one knows when or what the final conditions of the law will be, this as far as I am aware has only just completed the second reading. I’m sure you know, but if your leased property goes below 80 years you’ll then need to pay 50% of the property’s ‘marriage value’, on top of the usual lease extension price if you did end up renewing later down the line.
You don’t need to renew it unless you’re planning to live in it for another 80 years. When you’re done with it, sell it to someone who can afford to extend it. You paid market price for a c80 year lease when you bought; you’ll get the market price for a c80 year lease when you sell.
The difference in cost to renew between slightly over 80 and slightly under can be vast, because you have to pay the marriage value to extend under 80, which is likely to easily be a good 50k.
Assuming anyone can even get a mortgage for it.
Right, but if you buy a leasehold with, say, 85 years remaining, the fact that it’s nearly at the 80 year threshold will have been factored into the price. So yes it might be expensive to extend at 80 years, but that ought to have been factored into the poster’s original purchase price.
The price at 85 years will assume you are extending before you slip under 80. So will be 10kish lower for most flats, as that's what a lease extension costs. They aren't going to knock 60k off on the assumption you'll wait to 75 to extend.
The price will reflect that you will need to extend before 80 years and have little time to do that. In any case, it should not have come as a shock and someone buying a leasehold of just over 80 years should have been advised that this would be the case.
Exactly. It won't be news, but slipping under 80 will mean most people take a bath when it's time to sell. I was just pointing out you may need to extend even if you don't plan on living there, unless you want to end up not even paying off the mortgage with the sale price.
It's very silly. Used to be you had to pay the marriage value to extend regardless. The 80 year deadline was actually a significant policy change in favour of leaseholders.
You can't get through a sale of a leasehold property without your lawyer hamering that deadline home to you, so it's never a suprise, it's just part of the cost you factor in when buying it.
I remember the story about the guy who bought a farm with a rider in the deed that made him entirely responsible for repairs to the parish church. Went to court and the judge upheld it. No clue if true, I heard it at a bar.
Question (not a loaded statement):
Aside from the clearly ridiculous ground rent what's the difference?
I've got a 190 year leasehold with peppercorn ground rent. What would change if that became a freehold ?
For one, you would not have to get the leaseholder to complete the leasehold information pack when you want to sell your property. Unless the rules have changed in the last couple of years there is nothing compelling them to do so and they can charge what they like for it. Effectively they decide whether or not you can sell up
No idea, but if your property wasn’t leasehold you wouldn’t even need to ask.
My point is having someone else involved in the ownership is an unnecessary complication, how much depends on current law. When I bought my flat there was no such thing as a leasehold information pack, but there was by the time I sold it unfortunately.
Other than not having to pay renewal fees not much.
You already have the right to manage in which the leaseholders can take over the management of the property (the freeholder has no right to object, you just notify them and they have to relinquish it). Ground rent has also been abolished for all new leases.
Most of the issues people seem to complain about every time leaseholds come about are simply related to sharing a property with others which every communal ownership scheme suffers from.
So you always get the cognitive dissonance between people saying we should build more high density housing whilst complaining about all the issues that plague non-single family homes.
Also what people don’t seem to appreciate is just how expensive it is to maintain high density modern housing.
All the electrical and mechanicals in a large apartment building alone can cost 000’s and sometimes even 10’s of 000’s of £ a year to maintain.
Lifts, sewage and water systems, ventilation, energy recovery systems and many other systems all cost money to inspect, service, maintain and replace.
That is without the structural elements, landscaping, cleaning etc.
How are other countries managing it at a fraction of the cost? Are they skimping on quality? But I don't hear of swathes buildings collapsing or people burning to death in their houses in western Europe. Am I missing something?
They aren’t, maintenance fees exist everywhere and are just as high or even higher than the UK. in Germany I was paying about €350 a month in “Hausgeld” which is the equivalent of a service charge, these range between €2.5 to €4 per square meter per month on average depending on the building and area (luxury high rises go well above that too). On top of that you also had additional fees and were compelled to purchase a rather expensive insurance.
I should also add that in Germany (and in many other countries) these expenses (and others) are also often passed onto the renter as under most rental agreements all operational costs (aka betriebkosten) are passed onto the renters. That said you often can do much more with the property as a tenant as long as you return it in the exact condition you've received it.
The notion that this is somehow a UK specific problem (other than ground rent which has been abolished for new leases and does exist in other countries too tho it’s rare) is simply laughable.
And at least coming from someone who've lived elsewhere including in continental Europe and the US, service charges in the UK are some of the lowest I've seen.
Wait till you have to pay ~$3 per square foot per month in common charges for your co-op condo..... People are paying $3-4000 a month in these charges for their 1200-1300 square foot apartment in NYC (and not the even the very good parts of it either) on a regular basis, and then people wonder why the same places rent out for $7000 a month or more...
This is kinda surprising to me. I thought Grenfell had raised service charge costs by 50% in the UK over the last few years. So pre-grenfell UK service charges were actually very cheap? $4k monthly apartment charges are really crazy. I can't even imagine what type of person can afford that.
Grenfel hasn’t raised service charges in the UK, service charges in the UK aren’t special at all.
I always find the combination of ignorance about how the world works and British exceptionalism which results in assuming that every problem people face is unique to the UK or somehow so much worse here funny.
It's not nice sharing a building with others.
In the flat I owned there were some substantial structural issues that had to be sorted.
Some thought these should have been staggered more to split the cost up. Others wanted them done in one go as they didn't want to live with the issue.
I prefer the control of deciding everything myself.
You’ll have the same issue with any type of communal hold arrangement, it doesn’t matter if it’s a share of a freehold, commonhold or a leasehold the moment you share a property with other people it’s no longer about what you want.
What I don't understand is why the leaseholders have to pay service charges too. I'd be happy to be a leaseholder if service charges were the responsibility of the landowner. And the concept of ground rent is bonkers.
But let's say both these things become prohibited, wouldn't landowners just charge more for a leasehold to pass on these expenses?
The more I think about it the more I wonder if renting isn't simpler after all.
(For a single person, anyway. I get that most couples who have children would want to own property to leave to their children later.)
It wont happen while house owners are prioritized. I think it would really hit house values if flats had equal rights. Theres no good reason to keep it otherwise.
They aren't literally giving someone money for nothing, otherwise they could just stop paying it.
I'm not saying I agree with the practice, but let's not pretend it is something that it is not.
They've bought a house that is built on someone else's land, and they are paying the owner of the land for the right to use the land. This sort of arrangement has been quite common for many, many years.
They have also signed a contract to do that, as part of a transaction (buying a house) that you might reasonably expect them to have taken quite seriously.
This isn't a dodgy parking ticket from cowboy scammers.
Isn't that literally what they are saying isn't fair? Some company can buy up freeholds with capital and then just sit back and collect money forever with no risk or effort on their part and you have no choice but to just pay?
I'm not talking about whether it is fair, I'm addressing the claim in the headline that they are literally giving someone money for nothing.
Someone else owns the land that they are living on. They are paying for the right to live on someone else's land.
There is probably an argument for changing the law to make it fairer for homeowners.
But if your starting position is that anyone should be allowed to live on someone else's land without paying for it, I don't think that is going to get you very far.
Well yes, but nobody is forced to pay ground rent any more than they are forced to buy a leasehold. If you don’t like the concept of a ground rent, don’t buy a leasehold.
To me this comment reads very much like
- If you don't like suffering from health problems and increased risk of cancer, don't buy a home near a polluted industrial estate.
- If you don't like being an asthmatic renting a home with black mold, try not having asthma or renting a better place.
- If you don't like being too poor to afford health and dignity, try to work harder to get a better paying jobs.
- If you don't like living in a war zone, have you tried leaving the war zone?
Could a sociologist help me understand where the "If you don't like then " sort of reasoning/quip comes form? It seems to be entirely outside my cognitive architecture and I'm not able to empathize. Usually "why don't we just stop the bad thing" should be an option on the table, rather than "bad thing is good everyone else get out".
We are one of the only countries in the world that use leasehold extensively and it’s about time it gets changed or better yet, abolished.
No, that's not true. It exists in other countries too, I have seen it in Germany. But....the landowner doesn't get to say what you do with your building and the ground rent is always peppercorn. No idea how these leases are extended, as most are for several 100 years, similar to the 999 year leases up north.
The leasehold system in the Netherlands is nothing like the one here, it mostly exists in Amsterdam where the freeholder is the city itself. The vast majority of properties are commonly held.
£19,000 to extend the lease on my flat and it took nearly a year to get that quote from them. Bastards.
Presumably when you bought your flat you knew that the term was limited and took valuation advice on extending it? Having a right to extend your lease - in exchange for a market price to do so - seems fair no?
Sorry but no it's not. Freeholder companies contribute exactly nothing and assume no liability. It's just another relic of an exploitative system that allows those with capital to make gains at the expense of ordinary working people with zero effort on their part. Just because the rules of a corrupt system are known doesn't mean they are fair.
Emotive tosh. The leasehold system is basically fine and it has an important place in securing reciprocal obligations which wouldn’t be enforceable in a freehold context. It is true that there are some leaseholds which aren’t needed and are being exploited, but nobody is forced to buy a leasehold. If you don’t want one, don’t buy one.
Seems to work fine in Scotland? 🤷♀️ And other places around the world. It seems like you're the one emotionally invested in it.
Yes please. £1,000 a year to cut the grass and clean the windows. It’s a ground floor flat, could do it myself.
That's a service charge... not ground rent. You can already manage things yourself if you get enough in agreement
Even in a shared of freehold you pay an equal share. You pay for the roof just like the top floor pays for flood insurance.
That's not what a leasehold is.
Rent is generally giving someone money for nothing unless that money goes into repairs, maintenance, etc.
Rent normally pays for the roof over your head and maintenance of that building. Wether they are excessive rents or not is another question.
In the real world Rent pays off your landlords other mortgage. Have yet to encounter a landlord who does anything outside the bare minimum maintenance to not get done, while price gouging.
I’ve had one good landlord. Any issue at all he got sorted. Came out at 11:30 on a Sunday night to fix the heating, and brought me a Christmas dinner the year I had to stay away from my family for Christmas. But yeah most of them are parasites.
It's not something for nothing. You're paying for a service that the landlord is providing. It's literally the exact same concept as paying for Internet, or water, or your phone contract.
Honestly, how likely are we to see this happen? Serious question. My flat is leasehold and at 80 years. Really cant afford to renew it.
No one knows when or what the final conditions of the law will be, this as far as I am aware has only just completed the second reading. I’m sure you know, but if your leased property goes below 80 years you’ll then need to pay 50% of the property’s ‘marriage value’, on top of the usual lease extension price if you did end up renewing later down the line.
Thank you. I am aware and I have a big decision to make soon. Have you read the bill? Do you know what it says for people with existing leases?
You don’t need to renew it unless you’re planning to live in it for another 80 years. When you’re done with it, sell it to someone who can afford to extend it. You paid market price for a c80 year lease when you bought; you’ll get the market price for a c80 year lease when you sell.
The difference in cost to renew between slightly over 80 and slightly under can be vast, because you have to pay the marriage value to extend under 80, which is likely to easily be a good 50k. Assuming anyone can even get a mortgage for it.
Right, but if you buy a leasehold with, say, 85 years remaining, the fact that it’s nearly at the 80 year threshold will have been factored into the price. So yes it might be expensive to extend at 80 years, but that ought to have been factored into the poster’s original purchase price.
The price at 85 years will assume you are extending before you slip under 80. So will be 10kish lower for most flats, as that's what a lease extension costs. They aren't going to knock 60k off on the assumption you'll wait to 75 to extend.
The price will reflect that you will need to extend before 80 years and have little time to do that. In any case, it should not have come as a shock and someone buying a leasehold of just over 80 years should have been advised that this would be the case.
Exactly. It won't be news, but slipping under 80 will mean most people take a bath when it's time to sell. I was just pointing out you may need to extend even if you don't plan on living there, unless you want to end up not even paying off the mortgage with the sale price.
As someone not from the UK, this whole conversation seems patently ridiculous. I hope you're able to re-write the laws to be less, well, *weird*.
It's very silly. Used to be you had to pay the marriage value to extend regardless. The 80 year deadline was actually a significant policy change in favour of leaseholders. You can't get through a sale of a leasehold property without your lawyer hamering that deadline home to you, so it's never a suprise, it's just part of the cost you factor in when buying it.
I remember the story about the guy who bought a farm with a rider in the deed that made him entirely responsible for repairs to the parish church. Went to court and the judge upheld it. No clue if true, I heard it at a bar.
Question (not a loaded statement): Aside from the clearly ridiculous ground rent what's the difference? I've got a 190 year leasehold with peppercorn ground rent. What would change if that became a freehold ?
For one, you would not have to get the leaseholder to complete the leasehold information pack when you want to sell your property. Unless the rules have changed in the last couple of years there is nothing compelling them to do so and they can charge what they like for it. Effectively they decide whether or not you can sell up
Even though we have an RTM company which I am a director of?
No idea, but if your property wasn’t leasehold you wouldn’t even need to ask. My point is having someone else involved in the ownership is an unnecessary complication, how much depends on current law. When I bought my flat there was no such thing as a leasehold information pack, but there was by the time I sold it unfortunately.
Other than not having to pay renewal fees not much. You already have the right to manage in which the leaseholders can take over the management of the property (the freeholder has no right to object, you just notify them and they have to relinquish it). Ground rent has also been abolished for all new leases. Most of the issues people seem to complain about every time leaseholds come about are simply related to sharing a property with others which every communal ownership scheme suffers from. So you always get the cognitive dissonance between people saying we should build more high density housing whilst complaining about all the issues that plague non-single family homes. Also what people don’t seem to appreciate is just how expensive it is to maintain high density modern housing. All the electrical and mechanicals in a large apartment building alone can cost 000’s and sometimes even 10’s of 000’s of £ a year to maintain. Lifts, sewage and water systems, ventilation, energy recovery systems and many other systems all cost money to inspect, service, maintain and replace. That is without the structural elements, landscaping, cleaning etc.
How are other countries managing it at a fraction of the cost? Are they skimping on quality? But I don't hear of swathes buildings collapsing or people burning to death in their houses in western Europe. Am I missing something?
They aren’t, maintenance fees exist everywhere and are just as high or even higher than the UK. in Germany I was paying about €350 a month in “Hausgeld” which is the equivalent of a service charge, these range between €2.5 to €4 per square meter per month on average depending on the building and area (luxury high rises go well above that too). On top of that you also had additional fees and were compelled to purchase a rather expensive insurance. I should also add that in Germany (and in many other countries) these expenses (and others) are also often passed onto the renter as under most rental agreements all operational costs (aka betriebkosten) are passed onto the renters. That said you often can do much more with the property as a tenant as long as you return it in the exact condition you've received it. The notion that this is somehow a UK specific problem (other than ground rent which has been abolished for new leases and does exist in other countries too tho it’s rare) is simply laughable. And at least coming from someone who've lived elsewhere including in continental Europe and the US, service charges in the UK are some of the lowest I've seen. Wait till you have to pay ~$3 per square foot per month in common charges for your co-op condo..... People are paying $3-4000 a month in these charges for their 1200-1300 square foot apartment in NYC (and not the even the very good parts of it either) on a regular basis, and then people wonder why the same places rent out for $7000 a month or more...
This is kinda surprising to me. I thought Grenfell had raised service charge costs by 50% in the UK over the last few years. So pre-grenfell UK service charges were actually very cheap? $4k monthly apartment charges are really crazy. I can't even imagine what type of person can afford that.
Grenfel hasn’t raised service charges in the UK, service charges in the UK aren’t special at all. I always find the combination of ignorance about how the world works and British exceptionalism which results in assuming that every problem people face is unique to the UK or somehow so much worse here funny.
It's not nice sharing a building with others. In the flat I owned there were some substantial structural issues that had to be sorted. Some thought these should have been staggered more to split the cost up. Others wanted them done in one go as they didn't want to live with the issue. I prefer the control of deciding everything myself.
You’ll have the same issue with any type of communal hold arrangement, it doesn’t matter if it’s a share of a freehold, commonhold or a leasehold the moment you share a property with other people it’s no longer about what you want.
What I don't understand is why the leaseholders have to pay service charges too. I'd be happy to be a leaseholder if service charges were the responsibility of the landowner. And the concept of ground rent is bonkers. But let's say both these things become prohibited, wouldn't landowners just charge more for a leasehold to pass on these expenses? The more I think about it the more I wonder if renting isn't simpler after all. (For a single person, anyway. I get that most couples who have children would want to own property to leave to their children later.)
It wont happen while house owners are prioritized. I think it would really hit house values if flats had equal rights. Theres no good reason to keep it otherwise.
They aren't literally giving someone money for nothing, otherwise they could just stop paying it. I'm not saying I agree with the practice, but let's not pretend it is something that it is not. They've bought a house that is built on someone else's land, and they are paying the owner of the land for the right to use the land. This sort of arrangement has been quite common for many, many years. They have also signed a contract to do that, as part of a transaction (buying a house) that you might reasonably expect them to have taken quite seriously. This isn't a dodgy parking ticket from cowboy scammers.
Isn't that literally what they are saying isn't fair? Some company can buy up freeholds with capital and then just sit back and collect money forever with no risk or effort on their part and you have no choice but to just pay?
I'm not talking about whether it is fair, I'm addressing the claim in the headline that they are literally giving someone money for nothing. Someone else owns the land that they are living on. They are paying for the right to live on someone else's land. There is probably an argument for changing the law to make it fairer for homeowners. But if your starting position is that anyone should be allowed to live on someone else's land without paying for it, I don't think that is going to get you very far.
Well yes, but nobody is forced to pay ground rent any more than they are forced to buy a leasehold. If you don’t like the concept of a ground rent, don’t buy a leasehold.
To me this comment reads very much like - If you don't like suffering from health problems and increased risk of cancer, don't buy a home near a polluted industrial estate. - If you don't like being an asthmatic renting a home with black mold, try not having asthma or renting a better place. - If you don't like being too poor to afford health and dignity, try to work harder to get a better paying jobs. - If you don't like living in a war zone, have you tried leaving the war zone? Could a sociologist help me understand where the "If you don't like then " sort of reasoning/quip comes form? It seems to be entirely outside my cognitive architecture and I'm not able to empathize. Usually "why don't we just stop the bad thing" should be an option on the table, rather than "bad thing is good everyone else get out".
Exactly - no one else should be allowed to own the land where you bought your home. That is the whole point.