If I leased a car I wouldn’t expect to own it yet I had no clue that I didn’t own my Leasehold house
Leasehold provides a contract (lease) for long term renting of properties. It enables a person to rent, as a tenant, an individual property usually an apartment but recently also houses.
Upon signing the lease the contract will require the owner to pay an annual ground rent, contribute towards various funds, pay a management company upon demand and contribute towards the annual maintenance of the building.
This may also require contributions towards a savings account for the freeholders property benefit.
Its a blank cheque! Failure to pay these sometimes uncontrollable and onerous charges often results in eviction.
Contrary to popular belief at the completion of any mortgage you will not own the property, simply own the lease contract. The building being the freeholders.
At the end of the contract term you simply vacate and hand the property back – despite having paid a mortgage and savings, maintenance etc.
What about those who live in the 4 million leasehold properties that already exist?
Mortgage companies will rarely offer a mortgage on any property with less than 90 years left on the lease as its fast becoming a depreciating asset and therefore not suitable as security. To recover any money many leaseholders therefore find they have to negotiate and pay for an extension.
The law commission is currently reviewing the legal route and financial charges for these tenancies, facilitating them to be converted to freehold or commonhold.
N.L.C. National Leasehold Campaign is promoting the banning of leasehold whilst promoting freehold and commonhold for all homes.
L.K.P. Leasehold Knowledge Partnership is a charity and Secretariat of the All Party Parliamentary Group on leasehold reform who are trying to reform home ownership and help leaseholders who want to enfranchise (Buy their freehold).
By enabling the freehold ownership of apartments within a residential block, commonhold provides a superior actual ownership alternative to leasehold.
Currently, residential leasehold, which doesn’t afford legal ownership other than as a tenant, is the main way of obtaining apartments in England and Wales.
Hopton Build (Yorkshire) Ltd are the only known current builder offering commonhold and pioneering true home ownership for apartments.
Commonhold is presented as having a number of advantages over leasehold:
- Freehold ownership. In a commonhold, ownership in the apartments are capable of lasting forever. A lease, on the other hand, will expire at some point in the future.
- Standardisation. Commonholds have standard rules and regulations which should make conveyancing simpler and cheaper. It should also be easier for homeowners to understand their rights and obligations.
- Self-management by the flat owners. A commonhold is also managed by a company made up of the apartment owners. The interests of the apartment owners and the company which manages the commonhold should therefore be the same. This importantly enables owners to have full control of the costs, overheads and any subcontracted management.
In contrast, where flats are owned as leasehold, the management of the block of flats is often controlled by a landlord who often has totally different interests from the leaseholders.
Unfortunately many landlords see leasehold as an investment opportunity or a way of generating income and extra charges. This is why we believe the future should be commonhold.