Generalisation about Leasehold is increasing uncertainty
In the last few years Leasehold has acquired a bad reputation, with far too many articles online and in the press about how leasehold property is a bad investment and should be avoided. As is often the way, shock factor outweighs facts. Considering the millions of leasehold properties, the doubling ground rent scandal and the Grenfell Tower disaster represent the minority of cases. This is not, by any means, to say we should ignore these issues. The point is that there are a large number of leaseholders and leasehold properties which are functioning perfectly well, but of course we never hear of this.
In the office we are inundated by concerned leaseholders and of course we are happy to hear from them, but too often we are telling them that there is nothing wrong with their leasehold properties. People are panicking and that is never good in an already uncertain market.
Advantages of Leasehold
Amongst all this worry, the advantages of owning leasehold property are being lost and some buyers may be shying away from leasehold property, simply because it is leasehold.
The history of leasehold can be traced back to medieval times, but it wasn’t until the 1950s, fuelled by the post-war building boom and a social appetite for stability, that leasehold offered an opportunity to move away from the uncertainty of private rental agreements. Should we throw away a concept which has stood the test of time without considering all the advantages it offers? Here are some of the advantages:
- City centre locations: When space is at a premium, developers will build flats and apartments for central urban dwellings
- No physical maintenance: The physical maintenance of the property is delegated to the Management Company or Landlord
- Generally cheaper to purchase: Generally leasehold property is cheaper to purchase
- Shared-ownership schemes: Shared-ownership schemes offers affordable housing and has enabled many people to get on to the property ladder for the first time
- Facilities: Many blocks come with additional facilities such as gyms and concierge services. Retirement blocks have communal areas which bring a sense of community.
Leasehold is only set to improve
Although the Government’s actions were fuelled by the media portrayal of the leasehold system, for leaseholders it only means that the current legislative framework is set to improve. Many practitioners will claim that the measure set out in consultations (for leasehold reform, Commonhold and Right to Manage) have been a long time coming, but a system in need of improvement does not infer that the system is broken. This itself can be an advantage to leaseholders, things are only going to get better.
Not all Landlords are bad
It is easy to be swept away by the press portrayal of greedy Landlords or scoundrel Managing Agents, and leasehold as the system by which they persecute and rob leaseholders for unreasonable service charge and administration fees. The stories of disappointed leaseholders can be found easily, but again the voice of those who are happy with their managing agents and freeholders is not as evident.
Last year homebuilders Barrett Homes gave £4 million towards the cost of removing cladding, deemed dangerous following the Grenfell Tower disaster, although they were under no obligation to do so and the leases provided the costs of such work should be covered by the leaseholders. Small snippets of generosity such as these are often drowned out by cries against such homebuilders or written off as publicity stunts.
There is no such thing as risk-free property ownership
Of course, buyers should always be cautious and ensure they have all the information before deciding if a property is right for them. For leasehold in particular, a buyer should check they read their lease, are aware of the obligations and potential costs associated with the property.
No property purchase is risk free. Leasehold property has its own set of risks and ensuring buyer have all the information is paramount. This is the responsibility of agents, landlords, solicitors and, to some extent, the media. It is important not to be drawn into generalisations about leasehold property; a property is good or bad for a buyer depending on their own unique circumstances.
Published: 21 February 2019
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