Flat-Living.co.uk Future of leasehold What does the future hold?


Three leading experts provide their insights on what’s in store for the leasehold sector.


Comment from the Association of Leasehold Enfranchisement Practitioners (ALEP)


As we move out of recession and house building resumes, flats are likely to remain a significant proportion of any new build. So in future we can expect more service charge disputes and management issues, unless properties are set up with flat-owner management. There may be increased regulation of managing agents, long overdue, which could improve the lot of flat owners. If there is not, problems will rise


exponentially, possibly leading to more leaseholders resorting to the Right to Manage legislation and taking matters into their own hands. Since lease extensions are usually linked to flat sales, lease extension activity is likely to pick up as the market improves. Also


there may be a further increase in activity as lenders tighten lending criteria and more flats enter the danger zone of lease length. Already, ’80 years is the new 70 years’ in terms of the minimum lease length expected by lenders. It is unlikely that the new government will legislate on leasehold very


much, although some technical improvements would be welcome (such as allowing powers of attorney to sign notices) and ALEP has lobbied in favour of these. Also there may be changes to the way leasehold valuations operate. In a more austere economic climate, consumers will expect more value for money from their advisers, so we can expect to see greater price competition and transparency on fees. As the main body in enfranchisement, we aim to provide a reliable


and trustworthy pool of enfranchisement specialists to the public, marginalising those who choose to dabble in this field without sufficient knowledge or experience. We will continue to lobby for changes that we think will benefit players in the leasehold sector by sending open letters to those in positions of influence and networking with them.


Alex Greenslade, Honorary Secretary, ALEP


“ ‘80 years is the new 70 years’ in terms of the minimum lease length expected by lenders” Comment from LEASE


Comment from the FPRA


The decision of the new Housing Minister to ignore calls to regulate the property management industry will continue to have a real impact on leaseholders. Failing to regulate the industry will do nothing to drive up standards as more and more people will see managing property as an ‘easy option’ with little or no accountability.


Transparency in accounting has been delayed since CLRA 2002 came into force, which has done nothing to make the industry and the practitioners more professional and raise standards for leaseholders. We believe a long-term policy for the new coalition government


should be to have as many blocks as possible converted from leasehold to commonhold. As professional advisers and others become more familiar with the concept, that would help the market develop. At the moment, it is in the interest of leaseholders that commonhold should fail, or at least be second best and that leasehold, which is what they are locked into, should remain the preferred option. By being limited to new developments, commonhold is set up to fail.


This is because of the combination of a new and unfamiliar system of law to be applied by a new and untried management team, who do not know each other, have no experience of working together and do not know anything about their fellow flat owners, and have to manage a completely new building, with which they are also unfamiliar. Failure to allow existing leaseholders to convert to commonhold without 100% agreement, including that of the freeholder, has resulted in very few converting. What we believe is needed is a mechanism for a majority of leaseholders


to convert from leasehold to commonhold. It could be, at least initially, more than the bare majority needed to enfranchise. Two thirds or even 75%, could well get things started. We hope over the coming months and years that the FPRA can continue


to help more groups of leaseholders set up and run formally recognised residents associations as well as lobbying government for continued improvements to legislation to enable leaseholders to increase the value of their homes and raise the standards of the property management industry.


Bob Smytherman, Chairman, Federation of Private Residents Associations


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It is difficult to predict how the market will change over the next two to five years. The leasehold market is dominated by flats, which until recently had seen new build growth in particular encouraged by the buy- to-let market (BTL). It’s unclear if BTL will lead the market charge again in the medium- and long-term. We believe the strongest influence on the


market will be availability of desirable properties together with ensuring that people are properly advised before and during conveyancing. Good advice on what it means to be a residential long leaseholder as well as on the property and its value is vital. Any prospective leaseholder can read up on this in our booklet Living in Leasehold. At LEASE, our aim is to assist people, especially the vulnerable,


“At LEASE, our aim is to


assist people, especially the vulnerable, about their rights and obligations under residential long leasehold law.”


about their rights and obligations under residential long leasehold law. Our customers then become informed participants in the market where their property is situated. Being informed means they make better decisions and have fewer disputes, which leads to a more efficient market. That’s good both locally and nationally. Our mediation scheme aims to assist parties that do find themselves in dispute, resolve problems for themselves rather than having resolutions imposed on them by the courts and tribunals. Finally, with the independent, neutral and sound advice that we provide in addition to our work with bodies like the RICS, ARMA and ARHM we hope to see the standard of management in the sector continue to rise.


Tony Essien, Chief Executive, LEASE


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