Are Leaseholds a Property Nightmare?

A lot of you will have seen, or at any rate heard of, the Channel 4 Dispatches programme Property Nightmare – The Truth about Leaseholds which was broadcast on 20.8.12. In it the  presenter Morland Sanders investigated problems in long residential leases, dealing with landlords’ failure to repair, overcharging for repairs actually carried out, and similar problems. It dealt with a wide range of London properties, both low cost and expensive private flats, and also former council flats, acquired under  the right to buy.

It was a popular rather than a technical show, and various people in the housing field have criticised it for that, but I thought that it was very good. Not because it revealed all the technical aspects of taking landlords to the Leasehold Valuation Tribunal, which it didn’t, although they were mentioned at some length (and I understand that an interview with a Chairman had to be cut for want to space), but because of the insight that it gave into the driving forces that affected the various sorts of landlords, and tenants, and the extent to which they appreciated, and could influence, the outcome to their problems. I didn’t take notes so forgive me if some of the details are inaccurate – this doesn’t matter to the argument.

There were four scenarios:

  • The residents in the expensive flats had the best time of it: they were being overcharged for maintenance and services by a mass of inter-related companies connected, in some way, with their celebrity landlords. They had the time, money and intelligence to unravel things and extract a substantial refund. It all took longer than they wanted, and one felt that there was maybe more to things than the broadcaster felt able to say, but a good result in the end. The system worked.
  • The cheaper private flats were much more difficult. Here virtually no maintenance was being carried out at all, and the new landlords then tried to overcharge for the work that they were going to do. Looking at the properties you could see that years of neglect made any repair work an expensive exercise. The landlords tried to get something back for their pains by proposing to do a lot more work than was actually needed in some areas, and missing out all the fiddly bits. The residents had little time or money to fight them, but gave it a go.  I can’t remember the precise outcome, but it was a lot less satisfactory than the first one.
  • This paled into insignificance against the council flats. The first of these was an outrageous attempt by the London council to recover the cost of replacing the roofs and windows of four blocks by surveying only the worst one and them multiplying up. All the residents were sent demands for vast sums – £25,000 or more which they were never going to pay and were worried sick. Fortunately they were able to get help and fought the demands in the LVT and the cost of the roofing work was reduced to 25% and the windows to even less. Jubilation all round, but it should never have happened.
  • The final site was another council development that many of the tenants had bought under right to buy. Years later many had retired and when the repairs that time and poor building practices cause had to be carried out there was no way that they could pay for them.  Offers for payment by instalments with the balance to be paid on death were angrily rejected as leaving “debts to the children” and no solution was going to be a good one.

Now I can’t say how typical these cases are, although I suspect they are surprisingly common. I have certainly come upon increasing numbers of them in my own practice in the Midlands. What I can say is that there are important lessons that need to be learned by all involved, including landlords, leaseholders, councils, lawyers and the government.

The first is that long leasehold tenancies require far more sophisticated residents than most other sorts of accommodation, either short leaseholds or freeholds. They need to be able to afford and understand  a detailed survey before signing up, that takes account of the cost of replacing a roof 5 stories up in 20 years time. They need to be able to make sure there is a proper system of repair and maintenance work, and a sinking fund to cover the largest items. They need to be able to afford the work when the time comes, and fight the cost through the LVT if necessary. And if the survey shows that the cost will be more than they can afford they need to be able to walk away before signing. Not an easy task.

The next is that tribunals, rights to manage and so on only work if the residents have the time money and inclination to fight their corner. They often don’t. There is no legal aid now, and lawyers and surveyors can only afford so much pro bono work. Law Centres and Housing Officers are seriously under funded and can only do a little. People who can’t enforce their rights don’t have any.

Do bear in mind that in some cases the properties can  be not financially worth mending – the cost is far more than the improved value. No amount of legal rights will help here. And shared ownership makes things far worse because so many of the residents are seriously stretched financially to start with, and have no funds to spare for even small amounts of additional work.

And finally, although there are crooks and rogues out there (and the programme mentioned commission paid by builders to the landlords but not declared to the residents), there is in reality far more incompetence and jobsworth-ness.

So there is a big danger in regarding long leaseholds, and shared ownership leaseholds in particular, as the future for housing, as some people think. They aren’t a cheap and easy alternative; they are a complicated and unpredictable system that often goes wrong, sometimes disastrously.

There isn’t space to give the answer here, and you will no doubt have your own views on the matter, but as my old Professor used to say “if you can ask the right questions the right answers are easy.” So we all ought to be very grateful to Channel 4 for asking.


Author: Coventry Man

A perspective from a litigation lawyer in the Midlands. After many years in Coventry I am now with David Lee Solicitors in Kenilworth, helping people with all sorts of litigation, especially property and landlord & tenant problems.

2 thoughts on “Are Leaseholds a Property Nightmare?”

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s