Essential information for leaseholders

OPC member Ed Cruickshank-Rob on the facts about leasehold properties which every home buyer should know.

Since 1954, there have been no fewer than sixteen Acts of Parliament attempting to regulate the residential leasehold system. The latest is the 2002 Commonhold and Leasehold Reform Act which enables leaseholders to purchase the properties in which their flats are located or to seek the right to manage them. However, leasehold is still the only way to occupy many flats in Brighton and Hove and purchasers are often unaware of, or oblivious to, the real facts and pitfalls of leasehold.

Leaseholders do NOT actually own any property, just permission, subject to covenants and conditions, to live there for the time left on the lease. The property owner is always the freeholder who is in control. Leaseholders buy time, not property.
Leaseholders pay the freeholder for the management, maintenance and upkeep of the building, all of which is entirely at the discretion of the freeholder. As time passes, maintenance of the building and services costs more. Leaseholders pay for this, but the freehold gains value from improvements and repairs.

As time passes the lease also gets shorter, and a leasehold property loses value in two ways: it costs more to maintain, and the freeholder can charge more to lengthen a lease. The less time left on the lease, the less it’s worth, because it has to be returned (free of charge at the end of the period) to the freeholder who can sell it again. When a lease ends, the homes are still there but a leaseholder has to leave or may rent it back from the freeholder but without any long term security.

More information about leasehold can be found on the website of The Leasehold Advisory Service (www.lease-advice.org)

The OPC is seriously concerned that there are so many leaseholds in Brighton and Hove, including retirement flats, and numbers are increasing yearly with many ‘new build’ being sold on a leasehold basis. We will lobby our local MPs to urge the Government to seek means to end this archaic and unfair system once and for all.

Ed Cruickshank-Robb August 2010
Member, Brighton & Hove Older People’s Council