Diary of a high street conveyancer: 6th February 2023

So, Michael Gove made a statement last week to say that he was going to abolish leasehold. To be precise, he said:

“I don’t believe leasehold is fair in any way. It is an outdated feudal system that needs to go. We need to move to a better system and to liberate people from it.”

I was very tempted to pick up the telephone and call his office – and then I saw a letter in The Times which set out my thoughts on this, which I’m sure are shared by many conveyancers: leasehold works. It is the businesses around it which cause the issues and lead to unnecessary expense.

The last time thoughts turned to changing the system, commonhold was introduced. Would it surprise you to hear that commonhold was in fact introduced in 2002 and became law in 2004?  There are still fewer than 20 registered commonholds in England and Wales so do we think that it has worked so far?! Mortgage lenders are reluctant to lend on commonhold units. One of the problems could be that it depends on the individual unit holders being willing to participate in the management of the property, and let’s be honest: property owners in leasehold arrangements are often reluctant to take on property management roles.

And this is where I think the problem of the existing system starts – as I said, leasehold works. It is the commercial world which has grown up around it which is causing the issues.

I remember completing the purchase of a flat 30 years ago and sending the notice of assignment to the freeholders with a cheque, possibly for two guineas, as that is what was requested in the Lease. There was no Leasehold Information Pack – any documents would be provided by the seller. It was rare that the ground rent and service charge were paid to different companies. It was unheard of for the managing agents to charge extortionate fees for managing the property. So what happened?

I struggle to recall the actual timeline of what changed, but we are now in the position where if there is a piece of paper connected with the lease, someone has to pay for it and invariably this is the leaseholder. This then morphed into the leasehold scandal around new build houses, then apartments where the freehold element was sold to an investment company and it was the rent – both the amount and the rate at which it increased – which made the freehold a good investment.  What went wrong? And how did it go so wrong? When did preparing a Deed of Covenant and having to send it to the freeholder for approval start to cost over £500?

It is not leasehold that needs to be ended – it is the role of the managing agents and freeholders which need to be investigated and then regulated. If these areas are regulated, then I do believe that leasehold will continue for many more years. It would hopefully rid leaseholders of unscrupulous managing agents and we could perhaps move back to a fairer system – or is that just wishful thinking?

This is written by a real high street conveyancer who wishes to remain anonymous. Read more in Today’s Conveyancer every week.