When I first moved to the UK, I noticed all my friends who lived in flats were always complaining about "freeholders." The first few times I asked to have this explained, I assumed that I'd just misunderstood, because there was no way the system was that fucking terrible.
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Nope. It's that terrible.
In the US and much of the rest of the world, if you own an apartment in a multi-unit dwelling, the whole building is structured as a condo, or maybe a co-op. You elect a board and they decide how to maintain the building and charge fees accordingly.
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In the US and much of the rest of the world, if you own an apartment in a multi-unit dwelling, the whole building is structured as a condo, or maybe a co-op. You elect a board and they decide how to maintain the building and charge fees accordingly.
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But not in the UK. There, the building is owned by a "freeholder" and when you buy a flat, you buy a "lease." The leases are typically very long - 99 or even 999 (!) years - and at that timescale, it's pretty similar to actually buying a place, but there are real differences.
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The freeholder is not elected. They get to charge you "ground rent" - a sum defined in the lease - and they unilaterally decide how to maintain your building and what you will pay for it.
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Periodically, you have to renew your lease (which is expensive!) and if you forget to or can't afford to, you lose your home. Lease renewals have some statutory controls, but they're weak.
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And since lease renewals are the kind of thing you might do every 25 years, it's certainly possible that it will slip your mind. "OK Google. Remind me in 25 years to renew my lease."
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Eventually, I became a leaseholder, and worse, I was a leaseholder in a building that was 75% commercial, which meant that we "tenants" were not able to force our freeholder to sell to us.
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Our freeholder was - and is - a fucking bastard. This was true when our freeholder was a random plute, a literal rentier in desperate need of a guillotine.
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But it remained true when our freehold was bought by a charitable social housing association as a revenue generator for their subsidized housing blocks. If anything, they were even bigger bastards.
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Of course, you don't actually ever deal with your freeholder. Like every shitty feudal grift, the freeholder is insulated from the tenants by several layers of indirection.
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Even freeholder's agents - shiny-suited scumbags who ignored, abused or sidelined us - hired subcontractors to deal with us. These were giant companies like Tuckerman who did such shoddy work that it would have been hilarious if it wasn't terrible.
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Just for an example: they took 10 MONTHS to replace the light in the stairwell leading up to the flats.
But as bad as that was, the fees were the most brutal and farcical element.
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But as bad as that was, the fees were the most brutal and farcical element.
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They're not merely sky high and terrible value for money - they sometimes came with NASTY surprises.
Like the morning that a builder knocked on our door and told us that the freeholder had unilaterally decided to "upgrade" the block with new doors, windows and cladding.
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Like the morning that a builder knocked on our door and told us that the freeholder had unilaterally decided to "upgrade" the block with new doors, windows and cladding.
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That very (winter) morning - with no notice - the builders REMOVED ALL OUR WINDOWS AND DOORS and left us without for several days.
When it was done, we had a bill for £10k for our share of the "upgrades," and if we didn't pay it straightaway, we would lose our home.
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When it was done, we had a bill for £10k for our share of the "upgrades," and if we didn't pay it straightaway, we would lose our home.
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The thing about the leaseholder/freeholder split is that it preys on affluent people like us (the rental market preys on poor people in much more ghastly ways, of course). Preying on affluent people, even in the plutelicking Kingdom of Great Britain, is a fraught business.
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That's why, this week, the Law Commission published a landmark report that affects every one of the UK's 4.3m leaseholders, laying out dramatic reforms to the system:
lawcom.gov.uk/millions-of-le…
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lawcom.gov.uk/millions-of-le…
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The Commission had already made improvements to the "enfranchisement" process for buying out or extending your lease, reducing the cost of either by about a third (but they didn't create a simple formula to give leaseholders badly needy surety).
theguardian.com/money/2020/jul…
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theguardian.com/money/2020/jul…
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The new report recommends automatic, free extensions of leases to 990 years, with no ground rent and makes "dramatic" reductions to the cost of buying out your lease altogether.
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It creates a simple path to taking over the maintenance of your building, cutting out the fucking Tuckermans of the world.
It mandates all new housing be "commonhold" (more like condos or co-ops), which is bad news for greedy developers, 90% of whose flats are leaseholds.
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It mandates all new housing be "commonhold" (more like condos or co-ops), which is bad news for greedy developers, 90% of whose flats are leaseholds.
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Meanwhile, Hall is busily giving the guillotinable landlords of Britain some handsome gifts, like the right to add two storeys to any block without planning permission, a £20b to freeholders for doing nothing.
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These freeholders will be able to use the phantom two stories to extract higher sums from leaseholders seeking to buy out their freeholds.
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