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Guest blog: Leasehold scandal is based on flawed data

The Government’s leasehold reforms are a reaction to inaccurate media headlines claims Mick Platt, Director at Simarc Property Management.

This guest blog by Mick Platt, Director at Simarc Property Management Limited, is his response to a piece by leading property legal expert Nigel Read’s piece for The Negotiator:  What does the future hold for leasehold properties.

The leasehold debate is dominating the housing agenda right now. Headlines on the quantity of onerous leases are leaving consumers feeling anxious, concerned and ‘trapped’ in a system that is failing to provide proper education to buyers on leasehold implications prior to making an offer.

An onerous lease is one where the ground rent doubles in a fixed manner more frequently than every 20 years. Reports suggest around 100,000 homebuyers are trapped in their own home, suffering from spiralling ground rents. However, a comprehensive analysis of the market conducted by specialist property firm, Winckworth Sherwood LLP, sheds a whole new light, on a whole new story.

The reality is far from what has been reported and there are in the region of only 12,000 onerous leases in the market, out of a total of 4.5 million leasehold properties in England and Wales.

Action is required to remedy this situation, but we cannot lose sight of the fact that this is a tiny proportion of the market, equating to just less than 0.3% of all leaseholds.

And this figure will only fall as Taylor Wimpey and other housebuilding companies draw on new measures to provide compensation for those residents who hold these leases. Additionally, it is estimated that over 66% of these residents already have access to a scheme or the ability to vary their lease and by working closely with policymakers, we are confident this can be pushed close to 100%.

The 14-point pledge

This level of inaccuracy raises serious questions about evidence-based policymaking. The Government’s proposal to eliminate ground rents entirely and move towards a commonhold structure is based on flawed logic. Why throw out a system that is working well in 99.7% of cases? Surely regulation would be a better way forward.

Industry has already demonstrated a strong appetite for reform. In March of this year, 40 house builders and developers signed up to a voluntary 14-point pledge that has been designed to end the practice of onerous leaseholds.

As a contributor to the government-backed leasehold Pledge, we are aiming to create a fairer system for all current leaseholders and improve leasehold terms for new homeowners.

The pledge ensures that new homeowners, when purchasing their homes from developers, will not be offered a leasehold agreement with onerous clauses.

It will guarantee that legal advisers and developers are transparent with prospective buyers and that leaseholders have greater access to information throughout the buying and selling process.

This is the first step to establishing a legally enforceable Code of Practice made mandatory by the Government and regulated by an independent body.


The lack of regulation in the market has put the leasehold tenure under intense scrutiny. Scrapping the current system and forcing residents to take on joint-ownership and management of their own developments, as well as potential responsibilities for building safety, under current Government proposals, runs the risk of increased conflict.

The role for that ‘accountable person’ then becomes far more complex. This is when a professional freeholder as a steward of project and property management is imperative particular as freeholders are able to make those difficult decisions on behalf of leaseholders, which allows them to enjoy their home in peace.

Policymakers and the industry need to move away from myths and focus on professionalisation of the sector through regulation.




October 14, 2019


  1. Industry submissions to government indicate an appetite for leasehold reform, then follow up by pleading for minimal reform. Their plausible reasons have been heeded by successive governments as leaseholders concerns have been ignored.

    Recently, leasehold reformists such as LKP and NLC have united to put across good reasons for leasehold reform. Using the power of social media and by acting as Secretariat for the APPG for Commonhold and Leasehold Reform LKP have finally got the attention of the government to recognise there are multiple consumer concerns with the use of leases.

    There is no actual definition what constitutes an onerous lease and it is only in the last 10 to 15 years that doubling leases and those linked to RPI have been created, in such a way to help maximise freeholders profits and provide attractive investments for offshore investors.

    Historically ground rents were of no monetary value (peppercorn). Accepting Winckworth Sherwood LLP numbers to be correct, these should be judged against the number of leases created in the last 10 to 15 years when the abuse effectively started and not the 4.5 million reported. We should also remember that ground rent is income for providing no service whatsoever. Reducing ground rent to zero will effectively cease it being treated as an asset class.

    Government’s planned reform is about giving consumers a choice of tenures, and a choice of whether they want to manage their estates or buildings.

    Potential homeowners should have the choice of buying a lease which is wasting asset that ultimately reverts to the freeholder or an alternative tenure such as commonhold, owned by the purchaser. It is this choice that will ultimately focus the Management Companies and thus increase overall professionalism.

  2. No mention in this piece of how fast the ground rent increases, excessive permission, enquiry and admin fees, high costs to enfranchise or do a lease extension. Freeholder appointed managing agents with high service charges who may be impossible to remove in some circumstances, for example if a Housing Association, more than 25% commercial in the building, or an estate of houses. Long leasehold is an unjust, feudal relic, now unique to England and Wales. Everwhere else uses Commonhold, and manages without a remote freeholder, some who are offshore entities, and usually do not give a tinker’s cuss about the leaseholders other than extracting as much money from them as possible. A freeholder who may have paid just 1% of the building’s value for the freehold interest, and yet has near 100% control of leaseholders lives. Freeholders like this will cause more conflict in the building, not less, because leaseholders have to deal with an uncaring, profit motivated entity, which should have no part in their lives or homes.
    Leaseholders can make their own decisions about their destiny. If leaseholders cannot or will not agree, then the court can appoint a managing agent from an approved list. The freeholder is often an unnecessary expense and obstruction for leaseholders.
    Mortgage lenders should avoid toxic leasehold, look forward, and embrace Commonhold. Leasehold takes longer during property conveyancing and is more expensive, because there are 3 parties in a transaction including the unnecessary remote freeholder.
    The “pledge” is useless because many agents and freeholders have not signed up to it, or even if they have, fail to follow it. It is also useless because moving a high starting ground rent to RPI can still make the lease onerous. Ground rent above £250 per year can make the property an assured tenancy, and who knows what inflation will do in future. Many thousands of properties have a ground rent greater than 0.1% of property value which is regarded by some lenders as onerous.
    The bigger elephant in the room is out of control service charges, and the great difficulty many leaseholders have in challenging them and holding managing agents to account.
    Buildings insurance – another scam where commissions are paid both ways to agent / freeholder and insurer at leaseholders expense, or the freeholder fails to insure the building at all, leaving leaseholders exposed.
    Buildings and contents insurance for a 3 bed freehold semi, £130 per year. Buildings insurance for a 2 bed flat, £460 per year. Leaseholders add all the value to the building and their flats, yet suffer from corruption like this.
    Clear information at point of sale is needed so home buyers can make an informed decision, not buried in a complex lease document which only lawyers can understand.

    No freeholder means –

    No unnecessary permission fees
    No ground rent
    No lease extension or enfranchisement costs.
    No speculators controlling peoples’ homes and lives.
    The lease is a wasting asset for leaseholders which will no longer apply.
    No potential forfeiture of the lease.
    No mis-selling of houses as leasehold where the freehold was sold on to a 3rd party, and failure to warn home buyers this could happen at point of sale.
    Less work for expensive lawyers which has to be good in reducing costs for millions of leaseholders.

    A giant ponzi scheme, where a few benefit at the expense of 6 million leaseholders. It is incredible such a system as long leasehold still exists in the 21st century.

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