Battle continues against ‘feudal’ leasehold system

New legislation designed to end ground rents for new residential leasehold properties has been welcomed by an industry campaigner, but he claims it doesn’t go far enough.

Alan Draper, managing director of property management firm Common Ground, says the Leasehold Reform (Ground Rent) Act which came into force earlier this year, was a step in the right direction but will have little impact on the leasehold system.

Instead, he is continuing to campaign for the complete abolition of leasehold in favour of commonhold where the freehold of an apartment block, for example, is owned by its residents.

Alan said: “Feudalism was banned in England in 1660 via the Tenures Abolition Act, yet here we are in 2022 and it lives on through the leasehold system.

“Leasehold should have been outlawed many years ago. People have a right to own their properties outright rather than being forced to pay unpredictable extra costs for no benefit.

“Freeholders still make huge income streams through inflated insurance commissions, licences to alter, consents to let and, of course, the freehold interest is an appreciating asset as the leases run down.

“Additionally, with the move to electric vehicles in the UK and government grants available to help install this infrastructure specifically in leasehold developments, freeholders will be making a killing.”

Last year Common Ground attained accreditation from campaigning charity the Leasehold Knowledge Partnership which is dedicated to advising leaseholders on the perils and pitfalls of the leasehold system.

Now the company has announced a stringent new code of ethics that developers must sign up to if they want Common Ground to manage new builds.

Alan added: “Our code of ethics requires developers to vest the freehold interest in a residents’ management company granting 999-year leases.

“Whilst we would prefer to see developers create commonhold developments, the current legislation isn’t workable, so our requirements are a close approximation of it.

“The residential leasehold industry has the potential to facilitate the move to commonhold by taking a stance against leasehold as we have done, and I hope more agents follow suit.”

Sebastian O’Kelly, Director of the Leasehold Knowledge Partnership said: “LKP is absolutely delighted that Common Ground will not accept instruction from a developer unless the freehold is vested in the ownership of a residents’ management company.

“We hope all property management companies – including large ones, which are not large because of any expression of consumer choice – follow suit.

“Common Ground is absolutely correct in saying that leaseholders – any home purchaser – should be free from unpredictable additional costs imposed by utterly unnecessary and predatory third parties. Homes are too important to be someone else’s investment asset.”