Leasehold flats being banned by the government

DoctorCharlton

Hi all,

Don't post on here as much anymore but wanted to seek some help as the latest announcement from the government has concerned me.

I live in a new build leasehold apartment in Essex and am not sure what the future holds for me in terms of my property value and this move over to commonhold. How easy do you think it will be? and I'm guessing my property value will nosedive if I'm on this old leasehold system?

Thanks in advance everyone.

Chizz

If commonhold becomes the new standard, leasehold flats could lose value, especially if they have short leases or high ground rents. However, if the government provides a smooth transition to convert leasehold flats to commonhold, the impact may be less damaging to existing leaseholders. In the short term, uncertainty might make leasehold flats harder to sell, but in the long term, a shift to commonhold could be beneficial for homeowners. 

The current government - and, in fact, any government, from Labour to Tory or even LibDem - would not introduce a policy to "ban" leasehold flats if it is likely to end up with homeowners seeing the value of their properties being negatively affected.  So they will look at various ways of mitigating the effect, including making it easy, quick and inexpensive to convert from leasehold to commonhold.  

seth plum

Is this going to be a political thread (as in ‘government’ was mentioned)?
Oh goodie.
Self described anarchist Pierre-Joseph Proudhon said ‘property is theft’.
Would an 18 year old person just kicked out of the local authority care system be handed a freehold property by our wider society?

Rob7Lee

DoctorCharlton said:

Hi all,

Don't post on here as much anymore but wanted to seek some help as the latest announcement from the government has concerned me.

I live in a new build leasehold apartment in Essex and am not sure what the future holds for me in terms of my property value and this move over to commonhold. How easy do you think it will be? and I'm guessing my property value will nosedive if I'm on this old leasehold system?

Thanks in advance everyone.

I think the proposal is for new builds (after a given date) so likely won't affect you. That said even if it did any move from leasehold to commonhold would not negatively effect your value, if anything it would go the other way.

As it stands the problem comes when a lease starts to run down and get below 80 years, to extend the lease then really can start to add up from that point and also to a level they become unmortgageble.

grumpyaddick

seth plum said:

Is this going to be a political thread (as in ‘government’ was mentioned)?
Oh goodie.
Self described anarchist Pierre-Joseph Proudhon said ‘property is theft’.
Would an 18 year old person just kicked out of the local authority care system be handed a freehold property by our wider society?

It's not often you see Proudhon quoted on a football forum. 

But what do the anarchists have to say about VAR?

Tell me that..

Stig

seth plum said:

Is this going to be a political thread (as in ‘government’ was mentioned)?
Oh goodie.
Self described anarchist Pierre-Joseph Proudhon said ‘property is theft’.
Would an 18 year old person just kicked out of the local authority care system be handed a freehold property by our wider society?

If it turns into a political thread, it won't last long. My fear is that it probably won't anyway. Don't go spoiling it, Seth.

DoctorCharlton

Rob7Lee said:

DoctorCharlton said:

Hi all,

Don't post on here as much anymore but wanted to seek some help as the latest announcement from the government has concerned me.

I live in a new build leasehold apartment in Essex and am not sure what the future holds for me in terms of my property value and this move over to commonhold. How easy do you think it will be? and I'm guessing my property value will nosedive if I'm on this old leasehold system?

Thanks in advance everyone.

I think the proposal is for new builds (after a given date) so likely won't affect you. That said even if it did any move from leasehold to commonhold would not negatively effect your value, if anything it would go the other way.

As it stands the problem comes when a lease starts to run down and get below 80 years, to extend the lease then really can start to add up from that point and also to a level they become unmortgageble.

Thank you, I did consider messaging you personally as I know you have a lot of knowledge on this subject.

My current lease has 990 years on it so think I'm safe in that aspect.

Just to be clear, I'm currently in a leasehold so how easy do you think it would be to move to commonhold and will this have financial implications to myself? Does it need other residents to pay equal if so? 

I'm just putting myself in the landowners shoes, are they just going to be forced to hand over to the residents for a nominal fee? 

DoctorCharlton

and FWIW I really don't want to make this a political discussion, I am just seeking advice and guidance. Thank you

Rizzo

Rob7Lee said:

DoctorCharlton said:

Hi all,

Don't post on here as much anymore but wanted to seek some help as the latest announcement from the government has concerned me.

I live in a new build leasehold apartment in Essex and am not sure what the future holds for me in terms of my property value and this move over to commonhold. How easy do you think it will be? and I'm guessing my property value will nosedive if I'm on this old leasehold system?

Thanks in advance everyone.

I think the proposal is for new builds (after a given date) so likely won't affect you. That said even if it did any move from leasehold to commonhold would not negatively effect your value, if anything it would go the other way.

As it stands the problem comes when a lease starts to run down and get below 80 years, to extend the lease then really can start to add up from that point and also to a level they become unmortgageble.

We had this on my old maisonette in Sidcup. The 99 year lease had got down to about 80 years and this was somehow an issue. Why? Even if I'd stayed there the entire period of my 25 year mortgage, there would still be well over half the length of the lease remaining and yet that was an issue. Ended up buying the freehold with the guy who owned the other 3 maisonettes in our block to get round it but why on earth have a 99 year lease if it's a problem after just 20% of the duration? 

Rob7Lee

DoctorCharlton said:

Rob7Lee said:

DoctorCharlton said:

Hi all,

Don't post on here as much anymore but wanted to seek some help as the latest announcement from the government has concerned me.

I live in a new build leasehold apartment in Essex and am not sure what the future holds for me in terms of my property value and this move over to commonhold. How easy do you think it will be? and I'm guessing my property value will nosedive if I'm on this old leasehold system?

Thanks in advance everyone.

I think the proposal is for new builds (after a given date) so likely won't affect you. That said even if it did any move from leasehold to commonhold would not negatively effect your value, if anything it would go the other way.

As it stands the problem comes when a lease starts to run down and get below 80 years, to extend the lease then really can start to add up from that point and also to a level they become unmortgageble.

Thank you, I did consider messaging you personally as I know you have a lot of knowledge on this subject.

My current lease has 990 years on it so think I'm safe in that aspect.

Just to be clear, I'm currently in a leasehold so how easy do you think it would be to move to commonhold and will this have financial implications to myself? Does it need other residents to pay equal if so? 

I'm just putting myself in the landowners shoes, are they just going to be forced to hand over to the residents for a nominal fee? 

Think you'll need to wait the full details of the proposed change.

However in principle you've always been able to (and get first refusal) to buy the freehold if the freeholder wanted to sell or in certain circumstances

See link for current details: https://www.lease-advice.org/faq/how-can-i-buy-the-freehold-of-my-building/

In a large block that can become very difficult to get everyone on board, hence why I think this law will apply to future new builds that simply will no longer be leasehold as we know it.

For now just sit tight and wait and see, you have 890 years before you need to worry too much!

hermann

I haven't dug into the latest announcements but last time I checked this package of reforms (that's been knocking about for a few years now) also included some stuff about making it easier/cheaper for existing leaseholders to extend their lease. Hopefully some sensible measures like that come through and address any potential imbalance between the commonholds and leaseholds

Dansk_Red

I cannot see this working in high rise blocks with many being rented out and who owns the land between the blocks and who maintains that.

DoctorCharlton

Rob7Lee said:

DoctorCharlton said:

Rob7Lee said:

DoctorCharlton said:

Hi all,

Don't post on here as much anymore but wanted to seek some help as the latest announcement from the government has concerned me.

I live in a new build leasehold apartment in Essex and am not sure what the future holds for me in terms of my property value and this move over to commonhold. How easy do you think it will be? and I'm guessing my property value will nosedive if I'm on this old leasehold system?

Thanks in advance everyone.

I think the proposal is for new builds (after a given date) so likely won't affect you. That said even if it did any move from leasehold to commonhold would not negatively effect your value, if anything it would go the other way.

As it stands the problem comes when a lease starts to run down and get below 80 years, to extend the lease then really can start to add up from that point and also to a level they become unmortgageble.

Thank you, I did consider messaging you personally as I know you have a lot of knowledge on this subject.

My current lease has 990 years on it so think I'm safe in that aspect.

Just to be clear, I'm currently in a leasehold so how easy do you think it would be to move to commonhold and will this have financial implications to myself? Does it need other residents to pay equal if so? 

I'm just putting myself in the landowners shoes, are they just going to be forced to hand over to the residents for a nominal fee? 

Think you'll need to wait the full details of the proposed change.

However in principle you've always been able to (and get first refusal) to buy the freehold if the freeholder wanted to sell or in certain circumstances

See link for current details: https://www.lease-advice.org/faq/how-can-i-buy-the-freehold-of-my-building/

In a large block that can become very difficult to get everyone on board, hence why I think this law will apply to future new builds that simply will no longer be leasehold as we know it.

For now just sit tight and wait and see, you have 890 years before you need to worry too much!

that's a really helpful article, thank you. There is only 16 apartments in the block so a tad easier for us compared to others perhaps. 

seth plum

People having a secure place to live is a challenge and a societal issue.

blackpool72

seth plum said:

People having a secure place to live is a challenge and a societal issue.

Yes it is.
What with the population increasing faster than homes are being built it will continue to be so.

Stu_of_Kunming

It’s also it’s also completely irrelevant to the OP, but let’s just ignore the request to not make it political.

Trolls gotta troll. 

aliwibble

Rizzo said:

Rob7Lee said:

DoctorCharlton said:

Hi all,

Don't post on here as much anymore but wanted to seek some help as the latest announcement from the government has concerned me.

I live in a new build leasehold apartment in Essex and am not sure what the future holds for me in terms of my property value and this move over to commonhold. How easy do you think it will be? and I'm guessing my property value will nosedive if I'm on this old leasehold system?

Thanks in advance everyone.

I think the proposal is for new builds (after a given date) so likely won't affect you. That said even if it did any move from leasehold to commonhold would not negatively effect your value, if anything it would go the other way.

As it stands the problem comes when a lease starts to run down and get below 80 years, to extend the lease then really can start to add up from that point and also to a level they become unmortgageble.

We had this on my old maisonette in Sidcup. The 99 year lease had got down to about 80 years and this was somehow an issue. Why? Even if I'd stayed there the entire period of my 25 year mortgage, there would still be well over half the length of the lease remaining and yet that was an issue. Ended up buying the freehold with the guy who owned the other 3 maisonettes in our block to get round it but why on earth have a 99 year lease if it's a problem after just 20% of the duration? 

The reason why it gets expensive is there's this thing called "marriage value" in current legislation that means if you have less than 80 years remaining on your lease you have to pay extra if you want to extend it or buy the freehold outright. The recent housing legislation that was passed by the last Government was meant to abolish this, but there's a legal challenge from freeholders going through the courts at the moment, and the Labour Government say they aren't going to implement that bit until there's been further consultation on related issues. The standard lease term was also extended to 990 years I think, so it shouldn't be a problem going forward. Those of us on old leases may have an issue, but given that hardly anywhere is commonhold at the moment it's not going to have an immediate impact.

DOUCHER

do all flats in a block have to agree to extend their leases or can you do it individually? 

Athletico Charlton

DOUCHER said:

do all flats in a block have to agree to extend their leases or can you do it individually? 

Can be done individually.

DOUCHER

Athletico Charlton said:

DOUCHER said:

do all flats in a block have to agree to extend their leases or can you do it individually? 

Can be done individually.

thanks 

ElfsborgAddick

blackpool72 said:

seth plum said:

People having a secure place to live is a challenge and a societal issue.

Yes it is.
What with the population increasing faster than homes are being built it will continue to be so.

And we all know why that is

seth plum

Because societal resources are not being used to help create the homes needed for the population.

swords_alive

This 'secure place to live' that the thread is presently focused on, is something everyone would benefit from. Leasehold is not secure for many. Grenfell and the cladding issues have highlighted this more recently. Stories of horrible freeholder behaviour and complex legal framework have also accelerated pressure for reform. But it will be resisted by the self-interest of landowners, and their supporters.

An expanding population isn't a threat to most of us. It's relatively trivial for a discussion about leasehold and commonhold. Some economists will argue that the rate of population growth must keep up with economic production and if we fall below one for one replacement of the workforce (as continues to be the state of most modern capitalist economies), we will continue to have issues with raising tax, labour shortages, and associated social care issues as the population ages. 

But it seems people feel threatened by what they perceive as population expansion,  especially those who haven't had the security of a place to live themselves, and then there are those who can't or won't see the bigger picture as it's easier to blame 'outsiders', or whoever they deem to be undeserving.

Back to commonhold, and it is perhaps a scary prospect for some. There's complexity and a transition period as with most societal change. It won't suit everyone to adopt or convert to the new arrangements. It's hard enough now getting people to attend an AGM or even to understand what a leasehold means. There's a higher level of responsibility in commonhold and loss of leaseholder protections. You are an equal, unit-holder, with responsibilities, but still most will be inclined to leave these to a few keen individuals to run the commonhold affairs for them, perhaps with a professional management company, and there will still be disputes, about payments and noise and everything else. Having a pop at outsiders will still be attractive to a few idiots while all this goes on.

https://www.lease-advice.org/advice-guide/commonhold/ 

cafcnick1992

It is undeniable that the population expansion in the UK is a direct cause of the housing crisis. All well and good for people who already own homes, but for those who don't (which accounts for many young people), you can see why they turn to parties like Reform. Labour intend to built 1.5 million homes across 5 years which is a very ambitious target. Even if they meet it, it won't make much different to the price of housing.

swords_alive

cafcnick1992 said:

It is undeniable that the population expansion in the UK is a direct cause of the housing crisis. All well and good for people who already own homes, but for those who don't (which accounts for many young people), you can see why they turn to parties like Reform. Labour intend to built 1.5 million homes across 5 years which is a very ambitious target. Even if they meet it, it won't make much different to the price of housing.

The supply of housing has been in decline since well before the most recent surge in population growth so how can population growth be its cause? (Housing- since privatisation of council housing stock (1980s+), mass immigration 2000+??). If it's house prices your concerned with (and that's taking us away from the OP and commonhold discussion still further), isn't supply a key factor as well as demand, and both of those take shape over long periods. Causality is complex, and certainly not 'undeniable'.    

seth plum

There are more, and more significant factors, that explains the current housing emergency than what people call population growth.

cafcnick1992

swords_alive said:

cafcnick1992 said:

It is undeniable that the population expansion in the UK is a direct cause of the housing crisis. All well and good for people who already own homes, but for those who don't (which accounts for many young people), you can see why they turn to parties like Reform. Labour intend to built 1.5 million homes across 5 years which is a very ambitious target. Even if they meet it, it won't make much different to the price of housing.

The supply of housing has been in decline since well before the most recent surge in population growth so how can population growth be its cause? (Housing- since privatisation of council housing stock (1980s+), mass immigration 2000+??). If it's house prices your concerned with (and that's taking us away from the OP and commonhold discussion still further), isn't supply a key factor as well as demand, and both of those take shape over long periods. Causality is complex, and certainly not 'undeniable'.    

It's both supply and demand. Whilst house building in the UK has been higher in the past, it isn't especially low at the moment, even though house building often mirrors the economy.

I work in the UK planning system and it is frustrating how bloated the requirements for planning applications has become. Environmental regulations are becoming overbearing. I worked in Canada for the last 4 years and the amount of detail you need to submit is half of what is required here. No wonder it takes so long to get these projects going.

blackpool72

UK population in 1970.  55 million 
UK population in 1980.  56 million 
UK population in 1990.  57 million 
UK population in 2000.  58 million 

So roughly an increase in population of 1 million per decade. 

UK population today is over 69 million and rising. 
It is undeniable that the recent increase in population has put enormous pressure on housing.
Even with the best will and intentions house building simply cannot keep up with this.

Rob7Lee

blackpool72 said:

UK population in 1970.  55 million 
UK population in 1980.  56 million 
UK population in 1990.  57 million 
UK population in 2000.  58 million 

So roughly an increase in population of 1 million per decade. 

UK population today is over 69 million and rising. 
It is undeniable that the recent increase in population has put enormous pressure on housing.
Even with the best will and intentions house building simply cannot keep up with this.

There’s 101 reason, one of which could be population growth although not so sure as 11m homes built in the UK since 1970…… so if the average occupancy is 1.5 it’s the status quo.

but there are less conventional families than 1970 and expect the average occupancy is lower generally.

seth plum

I can think of at least four major and significant reasons as to why we have a housing emergency that would come in (in my opinion) way before population growth.
I won’t say what those reasons are in order to avoid the personal attacks from all my enemies on Charlton Life.

PrincessFiona

Part of the population growth is net legal migration. It is many times that of illegal migration. Many people 'imported' to do jobs that would otherwise be unfilled. If only there were people who could do those jobs