Leaseholders need more education

It is one of the sector’s favoured clichés that leaseholders need greater education.

Although the rest of the world seems to find owning a flat relatively simple, leaseholders in England and Wales are unique in not quite understanding what it is that they own.

So the sector is all for a bit of education to put them straight: that they are tenants, not real homeowners, and that they need to pay their bills on time and without argument.


But the sector is a good deal less enthusiastic about the advanced syllabus of leasehold education that the Leasehold Knowledge Partnership is offering.

That raises questions like this: Who are the freeholders and why are they so keen to remain in the shade? Why do freehold assets pass from one company to another so frequently, and why are so many held offshore or in charitable trusts?

Above all, just how much money is involved in this murky corner of the residential property market, which our parliamentarians have unfailingly failed to reform?

Answers are beginning to emerge, helped by LKP now being part of the Open Data Institute, which was founded by the web inventor Sir Tim Berners Lee to make public data widely accessible.

So now we know from the Land Registry that £64.8bn of leasehold property was registered in 2015, and £13.73bn of that was new-build.

Rather more sketchy is the value of freeholds to the nation’s housebuilders, but it seems to be somewhere between £300m and £500m a year.

And just how much leasehold property is there?

Sector blow-hards like to pontificate about education, but seem rather less keen on acquiring any. For two decades, everyone happily went along with there being around 2.5 million private leasehold flats in the country


Thanks to LKP, government is considering policy on the basis that there are 4.1 million leasehold flats.

Unfortunately, leasehold tenure is proliferating like Japanese knotweed.

Why should it not do so, if you can knock out leasehold houses – there were £1.9bn of these last year, with 8,775 units registered – with ground rents that double every ten years from £295 to £9,440?

Leaseholder education has been given a boost by the new All Party Parliamentary Group on leasehold reform, chaired by LKP patrons Jim Fitzpatrick and Sir Peter Bottomley.

 It has demonstrated it is not decorative by demanding that plc housebuilders account for their scandalous ground rent terms, which have made their customers’ property unsellable.

Now attention is focusing on the Mundy decision with Sir Peter Bottomley laying down an early day motion raising the “injustice” of “relying upon relativity graphs which … lack robust methodology … leaseholders are overpaying for their lease extensions by thousands, and often tens of thousands, of pounds”.

The message to the sector could not be clearer: expect a little more leasehold education than you bargained for.

Sebastian O’Kelly, Director of the Leasehold Knowledge Partnership


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