Simon Davies, Co-founder of the Welsh Leasehold Campaign
I first became aware of the long leasehold system, currently almost unique to England and Wales, back in the late 1980s.
My father was struggling to buy the freehold for my aunt’s house in Cardiff from the Church Commissioners, and he said then “never buy a leasehold property”.
Against my father’s advice, I bought a leasehold flat in 2015, thinking I knew better, only to discover that I had little control over the service charge which increased rapidly.
My daughter bought a leasehold house four years ago with a more benign lease with over 900 years left and a very low ground rent. However she had to pay a high permission fee to the freeholder to re-mortgage, so we have now bought the freehold after a lengthy and expensive legal process.
A friend, too, was subjected to very high service charges when he bought a leasehold house with a Park Home style lease and was badly advised at point of sale. He could not remove the servicing company and it was very difficult to challenge the costs. Fortunately, he has now managed to sell up and escape.
These are just a few examples of the many hundreds of thousands of Welsh families who are stuck in the leasehold trap, a complex system of legalised extortion of which the mafia would be proud.
The process starts in the developer’s sales office or at the estate agents, where customers are convinced by slick marketing that they are buying into “home ownership”. What they are buying is a lease, or part share of a lease for a period of time, and subject to the conditions in the lease.
They do not own a single brick of their flat or house. They do not own a home.
The principal beneficiaries of this corrupt system are the freeholders who are mostly offshore, tax avoiding, faceless, companies. Other beneficiaries include developers, freeholder appointed unregulated managing agents, central government, local councils, housing associations, insurance companies and parts of the legal and surveying professions. With their vested interests, they say there is little wrong with leasehold and it only needs some tinkering to make the system work.
But to compound the injustice, leaseholders’ legal rights are inferior to those of the freeholder and often inferior to those who rent properties.
The freeholder can tie up the leaseholder with high ground rents, provide costly buildings insurance, appoint their own incompetent, expensive managing agent, arrange unnecessary extra works from which they take project management fees or commissions, charge expensive permission fees for any changes a homeowner may wish to make and request a fortune for a lease extension.
Any leaseholder who dares to challenge their costs can find themselves bogged down in a complicated, ineffectual, expensive system, knowing that the freeholder has the nuclear forfeiture option lurking in the background. Yes, a leaseholder could lose their “home” if they fail to pay the freeholder as little as £200!
The flammable cladding scandal has put hundreds of thousands of innocent Welsh leaseholders in the firing line to pay huge amounts to remediate defective buildings. Every Welsh leaseholder is indirectly affected as they will now have to prove their building is safe before a mortgage will be signed off by the banks.
The leaseholders cannot survey a big building before buying their flat and are now required to pay for the mistakes and omissions of others who include developers, central and local government, housing associations and regulators.
The government is requesting that the building owner, the freeholder, pays. The freeholder, who may have a very small financial stake in the building and is only interested in the income from it, will pass the remediation cost on to the innocent leaseholders, all because the leasehold system allows it. The leaseholders would be paying to remediate someone else’s building. Morally wrong, but legal. There are many leaseholders in Wales affected by the flammable cladding issue, now facing life-changing bills. Finding out that a flat, a home, is valued at zero after investing so much of their own money in it is heartbreaking.
Lloyd George was talking about leasehold injustice in Parliament in the early 1900s. Now more than 100 years later it is long past the time that leaseholders in Wales get fairness and justice for the places they call home.
We believe Senedd Cymru should implement the Law Commission proposals of 21st July 2020 as soon as possible and set a firm course for the introduction of Commonhold and abolition of leasehold, just as Scotland did in 2012.