Leading surveyor welcomes plans to end ‘feudal’ leasehold system
Dorian Wragg of Bruton Knowles says Labour's ambitions are laudable, but wonders if leaseholds will want to take on the management of their own blocks.
A leading surveyor and property expert has welcomed the Government’s proposals to go further on leasehold reform within England and Wales, saying Labour’s plans are a “positive step forward”.
The comments from Dorian Wragg, a partner at national surveying firm Bruton Knowles, follow proposals set out by housing minister Matthew Pennycook recently.
He committed to ending what he referred to as a ‘feudal-era system’ by the end of the current parliament in 2029, in particular to address the problems faced by leaseholders including high service charges and limited property rights.
Estate agents with longer memories will wish Pennycook well but recall that Michael Gove, when housing secretary under Rishi Sunak, revealed similar aims but which were not achieved.
Wragg adds: “[Pennycook’s comments are] an extension of the general thrust of government policy over the last three decades, with the intention of modernising the centuries-old feudal land-holding system and favouring leaseholders.
“Of course, there have been plenty of changes over the years to slowly enact changes to the leasehold system, as it stood.”
These include:
- Leasehold Reform, Housing and Urban Development Act 1993 (as amended) which enables a qualifying tenant, one with a remaining lease term of more than 21 years, to join with the leaseholders of other flats in a building to join together and buy the freehold of that building – empowering owners of short leaseholds to extend the term of their leases.
- Commonhold and Leasehold Reform Act 2002. It introduced commonhold, a new way of owning land based on the Australian and American models,
- Leasehold Reform (Ground Rent) Act 2022 which ended ground rents for new long residential leases.
- Leasehold and Freehold Reform Act 2024. It followed on from the 2022 Act and improved the transparency over service charges, giving leaseholders a new right to request information about service charges and the management of their building, administration charges and landlords commission on building insurance policies. It also extended the standard lease term to 990 years and gave leaseholders the right to extend their leases, buy their freeholds and take over the management of their building.
“That this Act grants leaseholders increased powers is a great move for them, but it whether many will want to utilise these powers or not will be worth watching,” he adds.
“It is hand in hand with the changes that Building Safety Act and the Fire Safety Act have undergone, which makes significant persons personally responsible for the management of health and safety matters in the buildings.
“The implications of self-management are significant and, where fault is found, it will have direct implications for those people managing residential buildings.
“The risk of non-conformance to statutory legislation in the wake of Grenfell may ultimately deter leaseholders from the self-management of buildings.”
I have serious concerns about the tendency of leaseholder campaigners to idealise commonhold-style arrangements. I know of one block of just four flats where the developer set up a very fair arrangement where the leaseholders were automatically members of their own management company, and could subcontract the management work – buildings insurance, basic maintenance of gardens, fencing, parking area etc – if they wished. Twelve years later and this vaunted self-management is not looking good: fences have blown down and not been repaired, there is always litter blowing around the parking area, the garden plants, lawn and containers at the front of the building look a right mess, as do the recycling and bicycle stores. Anything that requires day-to-day management looks very neglected.
The leaseholders’ management company is apparently still submitting company accounts and taking out buildings’ insurance, so one of the officers must be doing something, but the shabby appearance of the site suggests no-one wants to do the grunt work of commissioning repairs, collecting and administering the monies needed to pay for maintenance, etc, never mind accumulating a sinking fund to undertake big jobs – which will inevitably come – such as repairing and replacing the roof, the building’s render and so on.
You always hear from the leaseholders who moan about “excessive” service charges, but you never hear from the self-managed properties where the leaseholders can’t agree to do even the most basic of maintenance, and how dependent they are on a few volunteers who are actually prepared to do the hard work involved in property management. If self-management becomes commonplace, you are going to hear more and more news stories about leaseholders who feel just as “trapped” in their flats as they were with a third-party management company, because other leaseholders see self-management as just another way to obfuscate, delay, and do everything they can to avoid putting their hands in their pockets and maintain their properties. It’s an attitude that says: “There’s a leak in the roof and the sixth-floor flats have got water coming in. I however live on the ground floor, so why should I care? Let them pay to fix the problem, or I’m only prepared to pay for the most basic of repairs.”