Leasehold Reform Campaign

Frequently Asked Questions (FAQ)

Why is leasehold considered by some to be a feudal system, or referred to as ‘fleecehold’?

Apart from a handful of properties in the USA and Australia, leasehold exists only in England and Wales, having been deemed a “feudal system” and abolished elsewhere in the world. There are nearly 5 million leasehold properties in the UK in 2024. In Europe, commonhold (see glossary above) is a more widely-used system.

Leasehold is a money-making opportunity for freeholders/landlords selling homes under the guise of home-ownership, and leaves leaseholders open to exploitation, and profiteering. Leaseholders can be charged for:

• Ground Rent, a charge for rent of the ground on which a building exists, despite not receiving any actual service or benefit for it.

• Service charges (see glossary above). Sales and marketing agents typically sell leasehold homes with a small annual service charge, which increases significantly with a lack of transparency over time. This is often part of the business model of freeholders and/or managing agents.
  Service charges and the increasing of them by the managing agent or freeholder can be queried by leaseholders, but this process is often long, cumbersome and may not result in a positive outcome. The legal fees of the freeholder or managing agents can also be passed to the leaseholder directly or incorporated into their service charges in the future. 
  Many CMRA members who purchased leasehold flats in phase one of the Chobham Manor development were told by Taylor Wimpey-recommended solicitors that their annual service charges would be £1323.37. As we’re all very aware, 2024 service charges for Chobham Manor are far in excess of this figure and will only continue to increase. Increases in residents’ service charges make properties less valuable, less affordable, and often harder to sell in the long-term.

• Building upkeep and maintenance, either as part of, or in addition to their service charges. Leaseholders will typically be charged for cleaning of communal spaces, pest control, maintenance, upkeep and repairs. The normalisation of leaseholders being responsible for these costs, when typically, they don’t own any part of the building or communal areas, is part of the ‘fleecehold’ model. If a flat was privately rented, a landlord or freeholder would be expected to pay for and cover the costs of the above for their building and communal areas within it. Not a renter.

Why was I told I was buying a property if I only have the right to occupy one for a set period of time?

Sales and marketing agents often try to sell leasehold flats to potential buyers as if outright ownership occurs. Leasehold homes are referred to by agents as “property” and “your property” despite that fact that outright ownership is not being purchased. If no lease extension takes place, properties revert back to the freeholder at the end of the lease term. If unfair, unaffordable, and excessive service charges are charged, forfeiture can occur and properties revert back to the freeholder.

Leaseholders take out mortgages to purchase the right to occupy space for a period of time, and not to actually buy the property that they often believe is theirs. 

Does leasehold affect a property value or make a property harder to sell on?

Leasehold problems and pitfalls were brought into sharp focus after the Grenfell Tower tragedy, where many residents were trapped in flats that they could not sell, and/or facing bills from the freeholder for unsafe, flammable cladding. This particular failure of the leasehold system has still not been resolved, especially where developers are absolving themselves of responsibility in relation to cladding remediation, and residents are faced with the choice of paying for works on a building that isn’t theirs, or having an unsellable/worthless asset.

If there are unresolved or unfinished cladding disputes and works, or if service charge and ground rent increases are deemed unaffordable or excessive, it can make it harder to get a mortgage or re-mortgage on a leasehold property.

What are the main UK political parties’ stances on leasehold?

Conservatives – Michael Gove has been a long-standing supporter of leasehold reform by way of abolition and has managed to get the new Leasehold and Freehold Reform Bill to Parliament. As of March 2024, the bill is between the House of Commons and the House of Lords. Proposed amendments can be made at this time.

Many leaseholders and supporters of leasehold reform feel that the bill will not go far enough, and it is unlikely to result in the outright abolition of leasehold. The freeholder lobby is powerful, and over 20% of Conservative Party donations since 2014 have come from housebuilders, real estate tycoons and developers. In some cases, pension funds are linked to many leasehold properties,

Labour – Many Labour MPs have committed to leasehold abolition, and a move to commonhold for flats within the first 100 days of a new Parliament if the party wins the next general election. The Labour party failed to reform leasehold, as first promised in 1995 when in power, with a weak Commonhold and Leasehold Reform Act of 2002.

Green Party – Carla Denyer, co-leader of the Green Party, has publicly stated the desire to “abolish feudal forms of home ownership and replace them with a system that offers people choice and control.”

Liberal Democrats – The party supports “abolishing residential leaseholds and cap ground rents to a nominal fee, so that everyone has control over their property.” 

Additional FAQs to consider 

•  Would leaseholders still want or need to campaign for freehold or would common hold suffice?

• Which campaign groups other than political parties could Chobham Manor leaseholders join up with in common cause?   

• If there are commercial properties on the ground floor will that limit common hold possibilities 

• If a block is shared with shared ownership residents or housing association tenants will that limit common hold possibilities?

Glossary

Property - a thing or things that are owned by somebody, a possession or possessions.

Leasehold – A method of ‘owning’ property for a pre-agreed number of years. A leaseholder typically doesn’t own the property or the land that it sits on but owns the right to occupy the property for the years in question. Unless a leasehold property is sold to a leaseholder with a share of the freehold, a freeholder owns the building in which leasehold properties are contained.

Commonhold – The individual parts within a multi-occupancy building are divided into properties/units and common parts. Each unit holder actually owns their home/property, and the common parts are managed by residents themselves, a residents’ association, or a similar body. 

Freehold – A freeholder (or landlord) owns the building, the land on which that building or property sits, and any individual units within a building once a lease expires.

Service charges – Fees charged by the freeholder or managing agent. Charges can be used to pay for block or estate costs, cleaning communal areas, gardening, lighting, heating maintenance and upkeep.

Ground rent - Ground rent is a regular payment made to the freeholder of the leasehold property as a condition of the lease. It is typically justified as a charge for the use of the land that the leaseholder inhabits, and a freeholder or landlord doesn’t need to provide any services in return for ground rent.

Forfeiture – Forfeiture means that a lease is terminated, and the unit or property in question reverts back to the freeholder. This can arise if a lease breach has occurred.