Property: A lease hath all too short a date: . . . and when it runs out, you're homeless. Jonathan Sale on a bill to free leaseholders

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The Independent Culture
'I'M genuinely sorry about the Duke of Westminster,' Joan South says, 'but people like me are faced with being thrown out on the street.'

The House of Lords is currently considering the rights of leaseholders. If the Housing and Urban Development Bill is passed, residents will have the option of taking over their own blocks of flats from the existing freeholder. This right-to-buy legislation is being fiercely opposed by, among others, landowners who stand to lose control of their estates. No wonder the Duke of Westminster, the owner of a large number of London properties, has resigned from the Conservative party.

Despite feeling some sympathy for His Grace, Mrs South believes that the changes had to come. She and fellow members of the Leasehold Enfranchisement Association know what it is like to live with a lease that is steadily running out. Eventually the occupant, who has been responsible for the upkeep and even improvement of the home for perhaps decades, runs the risk of being left homeless.

'A lot of people lose their nerve when the leases are getting down to 10 or 12 years - and get out.' They reluctantly sell off the tail-end of their leases; as freeholders, they would have seen their asset appreciate in price.

Another reason why anyone would welcome the chance to escape from the leasehold system is a legal lasso known as 'privity of contract'. Anyone who has ever taken on a lease retains some responsibility for it even when they have sold it on. If the property is burnt down and the new leaseholder does a midnight flit, the original leaseholder is still lia-

ble - as are his or her heirs.

The bill gives hope to the hard- pressed leaseholders of a small estate of flats and houses in South London: 'We would be in control of things,' said the chair of the residents' association. Under the present system they are at the mercy of the frequently changing owner of their freehold. The soaring cost of service charges and uncertainty over structural problems have put off prospective buyers. The lessees have recently been presented with a bill for more than pounds 300,000 - pounds 20,000 each - to cover surveying and construction work. But what is it for? 'We know we have problems,' the chairman continued, 'but is it subsidence? Landslip? Faulty construction?' Belated investigations have yet to reveal the cause. The freeholder has plans for further development which would cram in additional houses and garages: a cynic might ask if the invoices popping through the letterboxes might perhaps be of more benefit to the new parts of the development than the old.

What the residents do know is that it is absurd to think of building anything else without identifying the reason for the cracks in the existing structure. They don't want anything else built at all - they like the view and they don't want to live on a construction site for months.

Even though the leaseholders in this block may be helped by the new bill, residents of any block which includes commercial premises taking up more than 10 per cent of the building will not be so fortunate. If a shop occupies 11 per cent of the space, residents of flats in the remaining 89 per cent of the building cannot buy out their leases.

'In a case like ours, it means the block must be at least 10 stories high to qualify,' explained the leaseholder of a pounds 120,000 flat near Tower Bridge who was caught in this particular trap. 'It is a five-storey building with empty shops at the bottom. What we're afraid of is a blighted, second-class property that no one wants to buy.' Understandably, buyers would look for a flat in a block which could become self-governing. 'It is a feudal landlord system,' he said. 'People don't have any say.'

Lindsay Brook knows what it feels like to be discriminated against in this way - by a loophole in existing legislation applying to houses rather than flats. Previous owners of his three-bedroom end-of-terrace house in Hackney chose not to buy the freehold when it first came available. By the time he acquired the property, the freeholder had increased the annual ground rent to pounds 260.

This is not a large sum, but it had the effect of preventing him from buying out his lease; the property failed the 'low rent test' under which the ground rent has to be less than two-thirds of the rateable value (in this instance pounds 342) before a leaseholder can buy the freehold. Since his ground rent is pounds 32 more than the cut-off point, he counts as a tenant who is renting the property. If his house were on the market, it would be far less attractive than similar, but freehold, properties.

Mrs South, by contrast, fell foul of a high rateable value. If the figure is more than pounds 1,500, as is the case with the house where she has lived for the last 33 years, the law at present prevents a leasehold from being upgraded to a freehold. The new legislation is expected to sweep away this upper limit. But Mrs South, an art historian whose husband died eight years ago, says: 'It may be too late now. I may not be able to afford it.'

The Leasehold Enfranchisement Association is at 10 Upper Phillimore Gardens, London W8 7HA.

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