Real Estate Investing Information » Leasehold Flat Ownership Steps

Leasehold flat ownership steps out of the dark ages

According to government figures, around 1.7 million of the population lives in leasehold houses, flats and maisonettes. Leaseholders have the right to live in the property for the
duration of the lease, not the real property itself. The freehold asset is generally owned by a separate person who employs a managing agent to maintain the property. In the past this triangular relationship has been a complicated one leaving leaseholders open to financial abuse.

Adam, 29, a leaseholder, says “In recent times, my flat was managed by an incompetent. Managing Agent whose only concern in the property was collecting money. My buildings’ insurance ultimately became so expensive I had no option but to act”. Another leaseholder, Peter, 43, says “My freehold owner asked me to pay for a maintenance programme that I had not even agreed or seen to. I felt as if my privileges were being thoroughly undermined”.

Debatably, the passing of the Common hold and Leasehold Reform Act 2002 has caused a revolution in the manner leasehold owners are treated. This Act was introduced slowly and only came into full force earlier this year. Still, positive feedback is already beginning to emerge.

Updated Leaseholder Rights
Leaseholders are now able to take over management of their property, by means of the Right to manage procedure. This normally takes from four to six months and does not involve court action or any necessity to prove incompetence of the current management.

Leaseholders can also join forces to buy their freehold with or without the Freeholder’s consent, using the combined Enfranchisement procedure. The freehold value is calculated using officially permitted guidelines to avoid overcharging.
Alternatively, leaseholders wishing to individually expand their lease by 90 years can do so with or without their freeholder’s approval or consent by applying to the Leasehold Valuation Tribunal .

As a last resort, should a service charge argument be irresolvable, there is always the alternative of having the matter decided by the Leasehold Valuation Tribunal. This is relatively cheap as legal costs are not awarded to either party. Applicants can in general expect a conclusion within ten weeks.

Adam chooses the right to manage option. He says “For me, it has proved a godsend. I got clear of my managing agent and there is now a better sense of solidarity amongst the leaseholders. We are now in a healthier position to capitalize on our asset.”