Domestic bliss or disaster zone?

Opinion is divided on leasehold reforms, writes Ginetta Vedrickas
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The Independent Online

Yesterday saw the closing date for responses to the Government's draft commonhold and leasehold reform Bill. The proposed legislation is intended to further the rights of leaseholders and means that two million flat owners will be able to buy their homes outright or take over the running of their properties.

Yesterday saw the closing date for responses to the Government's draft commonhold and leasehold reform Bill. The proposed legislation is intended to further the rights of leaseholders and means that two million flat owners will be able to buy their homes outright or take over the running of their properties.

Is this a new subject? No. There was the 1966 White Paper embodied in statute by the Leasehold Reform Act of 1967. This enabled most house leasehold owners to buy their freeholds. The 1993 Act extended this right to flat leaseholders but, with complex rules on residency applying, many have found it unworkable.

What does the current Bill propose? There are three strands to the proposed legislation. Firstly, a new system of ownership "commonhold" will give groups of people the right jointly to own their property's freehold and create a management company to run the common parts. The second drive seeks to simplify the law so that leaseholders can jointly buy a freehold and, thirdly, it gives leaseholders who do not want to buy, but who do want to manage, greater say over the running of their houses.

When will the legislation come into force? It is being pushed through as a priority and may become law by the early part of next year.

Why was further legislation necessary? Currently the situation is complex and there are many anomalies caused by the 1993 Act. Some flat leaseholders have bought their freeholds although no figures are available.

What do those in favour of these reforms say? The Government has listened to leaseholders and landlords and acted and this legislation will solve the many anomalies of the current situation. The UK is the only country to operate the leasehold system and this will bring Britain in line with the rest of the world and give flat owners more rights.

What do the Bill's critics say? The Government has not gone far enough and the proposed legislation is too heavily weighted in favour of the landlord. Introducing a new form of tenure "commonhold" will leave leaseholders stranded and ultimately devalue their properties. The consultation process, a 48-page questionnaire, has made it impossible for ordinary home owners to fully understand the Bill's main thrusts and it is a wasted opportunity.

Politics aside, what help is available for those considering self-management or buying their freeholds? Membership of the Federation of Private Residents Associations gives freeholders, leaseholders and tenants legal advice such as understanding leases and collecting service charges. LEASE, the government-funded leasehold advisory service, gives free advice on all aspects of tenure and the Association of Residential Management Agents has a free leaflet on how to hire a managing agent. The Royal Institution of Chartered Surveyors has produced a code of practice, approved by the Secretary of State, to cover the activities of landlords and managing agents.

What are the advantages of self-management? Tenants hope for more independence as well as cutting out managers, which theoretically will eliminate managing agents' fees. Experts warn that size is crucial to making your decision whether to self-manage. Tenants in larger blocks of over ten flats may find it problematic, particularly if a proportion of these flats is sublet. Blocks will need a representative willing to undertake management duties, which can be time-consuming, particularly if there are differing opinions within the block.

Views from those in the field Leasehold reform is a complex subject and inevitably there are opposing views. Leasehold Advisory Service (LEASE) spokesperson Peter Haler says: "Two years ago we set up a leasehold reform working party to talk through all the issues with representatives from tenants' groups, landlords, mortgage companies and everyone with a vested interest in the subject. Government officials listened and have produced a Bill which is a damn good try and which will sort out a hell of a lot of problems.

"Some tenants have withdrawn from the exercise which we feel is pointless. It's unrealistic to expect things to happen overnight, you can't instantly get rid of leasehold, but must let the market decide.

"Hats off to the Lord Chancellor's department, which has worked so hard over the question of commonhold. In ten years time, leasehold will be gone but for the time being you can't alter people's property rights. This Bill takes the incredibly radical step of giving tenants the right to manage for anyone who wishes to run their own affairs - and how can anyone argue with that?"

Joan South speaks for the Leasehold Enfranchisement Association, whose members withdrew from the working party. She says the Bill is "totally unacceptable and defective". "It's a disaster. I call it a cynical Bill and the only people to benefit will be the professionals such as solicitors who I'm sure will be supporting it as they will be making a fortune from the mess it causes.

"It won't sort out the problems of leasehold for people who've been suffering years of misery at the hands of rogue landlords, which is a wasted opportunity. To get commonhold tenancy you will need 100 per cent agreement, including the landlord and mortgagees and you'll never get it. I hope the Government will withdraw and rethink."

For help and advice contact LEASE: 020 7493 3116; Royal Institution of Chartered Surveyors: 020 7490 7037; Association of Residential Managing Agents: 020 8690 9077

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