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Guest blog: Managing agents need to realise that the days of leasehold are numbered

Campaigner Simon Davies rebuffs claims made by Property management firm Estates and Management that scrapping ground rents could be a disaster for leaseholders.

Simon Davies


Nearly everywhere in the developed world including Scotland commonhold-type systems are the norm so why does England and Wales still use the feudal leasehold system?

And what benefit does a leaseholder get by having a remote freeholder embedded in their flat or house? None. It adds to conveyancing costs because at least three parties are involved in the transaction.

Also, ground rent is for no service at all, but an added expense for leaseholders; permission fees are another unjustified income for freeholders, when leaseholders are paying excessive fees, for example to remortgage.

Many freeholders are not caring custodians of buildings or the leaseholders within them, when they are remote entities and often based offshore.

Their only concern is the income from the building, and the freeholds and ground rents attached are tradeable assets with a value. The leaseholder often has no say in who owns the freehold for their property, and the costs associated with it.


Also, the freeholder receives an unjustified windfall from a lease extension or sale of the freehold to the leaseholder, when they may have paid as little as 1% of the building value for the freehold interest in the first place, received an income from ground rents and permission fees for many years, but adding nothing.

The law is unbalanced and does not adequately protect those who have put the most money into the building or estate; the leaseholders.

The freeholder can appoint their own managing agent, who in some circumstances cannot be removed by leaseholders or only with great difficulty and cost.


Freeholders cannot claim to be caring custodians when they do not want to pay to replace flammable cladding, because the reason for their investment is to extract an income from the building, not look after it or the leaseholders within it.

The arcane complexity of the leasehold system has exacerbated the cladding crisis with 300,000 flats now blighted because no one wants to take responsibility for it, other than trying to get innocent leaseholders to pay to put it right.

England and Wales are unique amongst developed nations in using the feudal long-leasehold system. Everywhere else has placed the power in the hands of the flat owners to make their own decisions by using Commonhold type systems.

Good income

Commonhold has not taken off in England and Wales because many lawyers, developers, freeholders and their associated agents make a good income from long leasehold and the conflict associated with it, so have no incentive to change.

The voice of six million leaseholders needs to be heard and their concerns put first and foremost. England and Wales need to abolish long leasehold, join the community of civilised nations in the 21st century and not persist with a system still stuck in the 18th century.

Read the article that prompted Simon Davies to write a reply.

Read the government’s most recent published plans to tackle leasehold reform.

December 9, 2019

One comment

  1. The ground rent is for no service and the lease makes it clear that the ground rent income is not to be added to the service charge account

    Therefore it is a financial burden on the property and the consequences of agreeing to take on the lease with a ground rent needs to be considered carefully

    This could so easily be achieved by having the NPV of the ground rent shown next to the premium using a defined discount rate set by the Government from time to time .

    Therefore if you are buying a flat for £350k with a ground rent of £250 per annum doubling every 25 years then the NPV of the rent using a 6% discount rate is £5853. Therefore the total consideration is £355,583 and if SDLT was applied to the total the purchaser will appreciate what he is signing upto

    A ground rent is only onerous if it’s value is not accurately reflected in the price paid – a ground rent of £10k per annum linked to the RPI on a flat worth £350k would be onerous if £350k was paid for the flat but if the price paid for the flat fell to £100k as a result of the rent then a buyer who pays £100k has nothing to feel aggrieved about

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