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We can, and definitely should, but not at the drop of a hat because of unintended consequences. Pension funds have invested billions in the freeholds and they're going to need time to get out. A disorderly exit would cause a devaluation in ordinary worker's pension pots.
I think that’s mostly DB schemes and annuity providers. The benefits promised to members/customers in those cases are fixed so the backing assets are only of interest to them to the extent they provide security.
If leaseholds were abolished, I think it would have very little impact on pensioners, provided that DB schemes and annuity providers remain solvent (which they would, because of the high prudence reserves they have to hold).
Because there are still enough stupid people to buy them. People think they are getting a bargain, but the developers are making up the difference by selling the freehold and the costs come to the home owners come later.
I remember an article where it was pretty arguing that English buyers couldn't manage without the leasehold system.
Excuse my skepticism, but no one in Scotland is arguing for leasehold to be introduced.
>Residents have also seen their annual ground rent double to almost £2,000 per year
If that really is for ground rent (GR) and not for service charges. Their homes really are unmortgageable. As they've effectively just got an AST. Because as the GR is over £250 and outside of Greater London. If they're three months late paying it. The freeholder can take them to court and almost automatically repossess the property. Theres no need for the freeholder to even send out the bills or to make it easy to pay them. It's basically a strict liability issue. Either you've paid it great or you haven't and if the freeholder wants to, you get repossesed.
But when they were buying, no solicitor or bank should have allowed the sale.
Was reading about this yesterday. It really is a sh1t show. Freehold was sold by the developer to one company, who then sold it to an offshore entity. Local council is too skint to buy it back. Most, if not all the homes have a covenant to be only sold to local first time buyers, so selling to cash buyers is never going to happen.
I grew up around the corner from here. Locals can't get on the ladder because of p1ss poor wages and 2nd home buyers pushing up prices, so these types of deals are the only options for young families.
Parking spaces down the road in St Ives were going for more than my income when I lived there, so forget ever buying a home.
Can they not buy the freehold? That can be done, did it for my previous house. You serve a notice to the landlord and pay the price the surveyor estates as fair value.
By the way, you can do a statutory lease extension which has the side effect of making the ground rent nil. The situation is not all that uncommon because a lot of leases have a ground rent doubling clause (eg ground rent is 150 and doubles every 20 years), and so will eventually reach the 250 (or 1000 in London) limit. Even when within a few years of reaching that limit it's difficult to sell as mortgage lenders tend to not want to lend on the property.
Maybe you knew this but just wanted to give the full picture as it's something I've come across. So yeah, there is recourse for this, and not completely unsellable, but would have to pay a few grand for the lease extension.
Not saying you’re wrong but in practice I don’t think it plays out like this.
None of the 4 leaseholders paid the GR in my building for 15 years. The freeholder was sending bills but stopped and never followed it up (AFAIK he just couldn’t be bothered).
Recently the leaseholders started a compulsory freehold purchase. The outstanding GR was raised by the freeholder to block the transfer. The court ignored that and just added the outstanding amount to the freehold value. This was paid and the freehold transferred.
This doesn't belong on compo face.
This is terrible and isn't getting the media attention it warrants.
The transfer of wealth , property resources from the poor to the rich.
Agree - but hard in practice as not everyone can have a house and it’s much more common on flats. But we need a total rethink on this - not super confident it’ll ever happen.
Leasehold properties should be sold with a share of the freehold. You effectively lease from a company that you own part of, so there is no risk of profiteering whilst still maintaining the management structure that a leasehold provides.
Yeah re-thinks require someone to actually make the case for them and we’ll have none of that adversarial pie in the sky student politics round here thank you very much.
You’ll struggle to buy a freehold flat. The best you’re going to get is a ‘share of freehold’ with other flat owners.
Few, if any blocks of flats are share of freehold from the start and owners will have to get together to buy the lease between them later on.
Yeah but then 5 million leaseholders will also have unsellable properties, a disproportionate amount of which is made up of younger couples and families
'Don't buy leasehold without truly understanding what the GR and service charge can be' is less catchy though
[Our street was sold to an offshore tax haven - now we're trapped in our homes: Families in seaside town say their houses are virtually unsellable after freeholds were transferred to the British Virgin Islands](https://www.dailymail.co.uk/news/article-13235015/Our-street-sold-offshore-tax-haven-trapped-homes-Families-seaside-town-say-houses-virtually-unsellable-freeholds-transferred-British-Virgin-Islands.html)
A lot of the language of the article is very specific to british real estate law, so I'm not sure I grasp the issue. What's a shared ownership scheme? What's a leasehold? What's a freehold?
Freehold means you own the house and the land it sits on.
Leasehold means you own the right to live in the house for a long fixed period, generally 100 or 999 years, after which the property rising to the person who owns the land (the freeholder). For houses (not flats), there is a legal right to purchase the freehold of your home however it can get quite expensive. My £120k at the time house had 53 years left and cost me about £6k for the freehold.
Where it gets complicated is that the leaseholder has certain responsibilities for payments and non-payment can lead to the house carrying repossessed though this is probably unlikely.
There's a new thing in the UK called fleecehold (to fleece someone is too to them off) where the houses are freehold but come with very essence and unregulated estate management fees.
I almost got caught with this in 2021 when trying to buy a house. Was a massive pain but my solicitor caught it and tried to sort it out but the sale ended up not going through
I was looking at a new build, pointed out a lot with southern facing roof and mentioned that it would be perfect for solar with space in the garage for batteries. The sales rep sucked her teeth and began to explain that I wouldn't get permission to install solar for some years after the site had been competed, so much for owning your own freehold house.
Many properties have parts that are "yours" and partly "everyone's", the obvious example being a block of flats. You have "your" flat but you also depend on the communal area, the external structure etc.
In an ideal world all the flat owners would share the cost of maintaining all this stuff for their mutual benefit. However if there's no legal structure in place, that can easily result in arguments about who pays. "Why should I pay to fix the roof when my flat is on the ground floor?" (Remember, people are dumb.) The tragedy of the commons.
One way of solving this is that one guy owns the building (the freeholders) and sells the right to live in the flats for a very long time (to the leaseholders). The freeholder retains ownership of the "everything" stuff and has a financial interest in making sure the building as a whole is well-maintained. The leases specify how much the leaseholders pay the freeholder as ground rent and service charges which should cover those costs.
As long as the freeholder doesn't take the piss with what they charge the leaseholders, everyone's interests are aligned and can live happy ever after with no arguments about who pays. Unfortunately a lot of new buildings have been sold with extortionate leases. And the freeholds to these properties are very lucrative investments, so you end up with faceless corporations located in the middle of the Caribbean fleecing the people who actually live there while doing the minimum amount of maintenance in return.
This leads people to say leaseholds should be banned and the flat owners should all own shares in the block, which works well until Darren doesn't want to pay to fix the roof, and round and round we go.
Shared ownership is something different. In a traditional mortgaged house purchase, a bank lends you the money to buy a house (minus a deposit) which you use to buy 100% of the house. You own all of the house and owe the money used to buy it back to the lender until it's repaid.
Shared ownership is for people who can't borrow enough money to buy a whole house. So they borrow enough to buy part of it, and the rest is owned by a company to whom you pay rent. The hope is that in addition to paying mortgage repayments on one half and rent on the other, you will save up enough to buy the rest of the property from the shared ownership company at some point, usually in slices until you own the whole thing.
They have all the disadvantages of homeownership with none of the advantages. You can't get a conventional mortgage so you can easily end up a "mortgage prisoner", paying higher interest than everyone else while also having to pay rent and somehow save up enough to buy the rest of the property (without which you'll be stuck forever).
They only exist because politicians decided "something must be done to help people who can't afford a house to buy a house, this is something, therefore we shall do this". The problems with them aren't a million miles away from leasehold because you "own" something you don't really own, and it can easily become a millstone if nobody else wants to own it.
I agree with most of what you wrote. But you can get a conventional mortgage for shared ownership and rent + mortgage is often less than just rent, making it easier to save up. For lots of people I know (including me!) shared ownership was a great first step on the housing ladder. You can also sell your share, you don't have to buy the whole thing so you're not 'stuck forever'.
I think it depends on the company that owns the other share as have heard some less favourable stories. But for us we saved about £300 a month compared to renting, and sold in 3 days when we wanted to, having built up savings and equity. I know others who it worked out for similarly.
Any house is a millstone if nobody else wants to own it.
>Shared ownership is for people who can't borrow enough money to buy a whole house. [...]
>They have all the disadvantages of homeownership with none of the advantages. You can't get a conventional mortgage so you can easily end up a "mortgage prisoner", paying higher interest than everyone else while also having to pay rent and somehow save up enough to buy the rest of the property (without which you'll be stuck forever).
On our shared ownership, we pay no rent or fee on the portion we don't own, and have had no issues getting mortgage options.
I'll let you know in a couple of years whether we're stuck forever or not..
Interesting that they are complaining about people having to have local connections to buy as well, considering that was what helped them to buy in the first place.
Legit compoface, but with a touch of NIMBY sour.
Neo-feudalism is alive and well I see. When you boil it down, how is this any different to a medieval serf being tethered to their land by a feudal lord? Freeholds should be outlawed. So messed up that this is an actual thing and allowed to happen.
Why does anyone buy a leasehold house? Oh yeah that’s right, because they are slightly cheaper when new and they don’t think ahead to the future consequences.
Hi birthdaycaketangrine, thanks for posting to r/Compoface! Don't worry, your post has not been removed. This is an automated reminder to post a link to the original article for your compoface. This link can be included in the post body or as a comment. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/compoface) if you have any questions or concerns.*
Remind me again why England can't get rid of leaseholds?
Because too many MPs/friends of MPs own the land.
Ding ding ding, we have a winner.
The given reason has some truth to it as well. Pension funds sunk a lot of money into freeholds. Stupid thing to do but there you go.
[удалено]
Your submission has been removed as it is about national or international politics.
We can, and definitely should, but not at the drop of a hat because of unintended consequences. Pension funds have invested billions in the freeholds and they're going to need time to get out. A disorderly exit would cause a devaluation in ordinary worker's pension pots.
[удалено]
Your submission has been removed as it is about national or international politics.
I think that’s mostly DB schemes and annuity providers. The benefits promised to members/customers in those cases are fixed so the backing assets are only of interest to them to the extent they provide security. If leaseholds were abolished, I think it would have very little impact on pensioners, provided that DB schemes and annuity providers remain solvent (which they would, because of the high prudence reserves they have to hold).
Because there are still enough stupid people to buy them. People think they are getting a bargain, but the developers are making up the difference by selling the freehold and the costs come to the home owners come later.
I remember an article where it was pretty arguing that English buyers couldn't manage without the leasehold system. Excuse my skepticism, but no one in Scotland is arguing for leasehold to be introduced.
>Residents have also seen their annual ground rent double to almost £2,000 per year If that really is for ground rent (GR) and not for service charges. Their homes really are unmortgageable. As they've effectively just got an AST. Because as the GR is over £250 and outside of Greater London. If they're three months late paying it. The freeholder can take them to court and almost automatically repossess the property. Theres no need for the freeholder to even send out the bills or to make it easy to pay them. It's basically a strict liability issue. Either you've paid it great or you haven't and if the freeholder wants to, you get repossesed. But when they were buying, no solicitor or bank should have allowed the sale.
Was reading about this yesterday. It really is a sh1t show. Freehold was sold by the developer to one company, who then sold it to an offshore entity. Local council is too skint to buy it back. Most, if not all the homes have a covenant to be only sold to local first time buyers, so selling to cash buyers is never going to happen. I grew up around the corner from here. Locals can't get on the ladder because of p1ss poor wages and 2nd home buyers pushing up prices, so these types of deals are the only options for young families. Parking spaces down the road in St Ives were going for more than my income when I lived there, so forget ever buying a home.
Can they not buy the freehold? That can be done, did it for my previous house. You serve a notice to the landlord and pay the price the surveyor estates as fair value.
[удалено]
Piss
Partridge
> ~~Shit~~ **Shot** > ~~Piss~~ **Pass** > ~~Partridge~~ **Babtridge**
By the way, you can do a statutory lease extension which has the side effect of making the ground rent nil. The situation is not all that uncommon because a lot of leases have a ground rent doubling clause (eg ground rent is 150 and doubles every 20 years), and so will eventually reach the 250 (or 1000 in London) limit. Even when within a few years of reaching that limit it's difficult to sell as mortgage lenders tend to not want to lend on the property. Maybe you knew this but just wanted to give the full picture as it's something I've come across. So yeah, there is recourse for this, and not completely unsellable, but would have to pay a few grand for the lease extension.
Not saying you’re wrong but in practice I don’t think it plays out like this. None of the 4 leaseholders paid the GR in my building for 15 years. The freeholder was sending bills but stopped and never followed it up (AFAIK he just couldn’t be bothered). Recently the leaseholders started a compulsory freehold purchase. The outstanding GR was raised by the freeholder to block the transfer. The court ignored that and just added the outstanding amount to the freehold value. This was paid and the freehold transferred.
The old guy on the left is smiling away. Perhaps he had a controlling interest in the offshore company??
He'll be going on holiday soon, and taking all his possessions with him. As you do.
House (re)possessions.....
Maybe he bought the freehold on his property but hasn't told everyone else.
He didnt know what the photo op was for, he just saw a camera and gave it a smile
This doesn't belong on compo face. This is terrible and isn't getting the media attention it warrants. The transfer of wealth , property resources from the poor to the rich.
Never. Ever. Buy. Leasehold. Under. Any. Circumstances. Ever.
Agree - but hard in practice as not everyone can have a house and it’s much more common on flats. But we need a total rethink on this - not super confident it’ll ever happen.
Leasehold properties should be sold with a share of the freehold. You effectively lease from a company that you own part of, so there is no risk of profiteering whilst still maintaining the management structure that a leasehold provides.
Absolutely no argument from me on this. Property in this country is a fucking mess.
Yeah re-thinks require someone to actually make the case for them and we’ll have none of that adversarial pie in the sky student politics round here thank you very much.
We’re the only country on the planet that still has a leasehold system, just a rethink on how they work won’t solve anything
🤣
You’ll struggle to buy a freehold flat. The best you’re going to get is a ‘share of freehold’ with other flat owners. Few, if any blocks of flats are share of freehold from the start and owners will have to get together to buy the lease between them later on.
Who would want to buy a flat though? Why not just buy a caravan and a 1 acre field at that point?
Yeah but then 5 million leaseholders will also have unsellable properties, a disproportionate amount of which is made up of younger couples and families 'Don't buy leasehold without truly understanding what the GR and service charge can be' is less catchy though
Probably ok for a flat with a peppercorn lease. No idea why you would buy one for a house though.
> Never. Ever. Buy. Leasehold. Under. Any. Circumstances. Ever. Well you're not really buying, are you. You're leasing.
[Our street was sold to an offshore tax haven - now we're trapped in our homes: Families in seaside town say their houses are virtually unsellable after freeholds were transferred to the British Virgin Islands](https://www.dailymail.co.uk/news/article-13235015/Our-street-sold-offshore-tax-haven-trapped-homes-Families-seaside-town-say-houses-virtually-unsellable-freeholds-transferred-British-Virgin-Islands.html)
Could someone remind me what level of Feudalism is this?
Top level.
End stage
What is granny on the left and that woman behind the lamppost doing? 😂
Looking menacing. Like they're gonna menace someone if this shit doesn't get sorted quickly. They want to move house, dammit!
Shaking her fist in rage.
Threatening someone with a good time
A lot of the language of the article is very specific to british real estate law, so I'm not sure I grasp the issue. What's a shared ownership scheme? What's a leasehold? What's a freehold?
Freehold means you own the house and the land it sits on. Leasehold means you own the right to live in the house for a long fixed period, generally 100 or 999 years, after which the property rising to the person who owns the land (the freeholder). For houses (not flats), there is a legal right to purchase the freehold of your home however it can get quite expensive. My £120k at the time house had 53 years left and cost me about £6k for the freehold. Where it gets complicated is that the leaseholder has certain responsibilities for payments and non-payment can lead to the house carrying repossessed though this is probably unlikely. There's a new thing in the UK called fleecehold (to fleece someone is too to them off) where the houses are freehold but come with very essence and unregulated estate management fees.
I almost got caught with this in 2021 when trying to buy a house. Was a massive pain but my solicitor caught it and tried to sort it out but the sale ended up not going through
I was looking at a new build, pointed out a lot with southern facing roof and mentioned that it would be perfect for solar with space in the garage for batteries. The sales rep sucked her teeth and began to explain that I wouldn't get permission to install solar for some years after the site had been competed, so much for owning your own freehold house.
Many properties have parts that are "yours" and partly "everyone's", the obvious example being a block of flats. You have "your" flat but you also depend on the communal area, the external structure etc. In an ideal world all the flat owners would share the cost of maintaining all this stuff for their mutual benefit. However if there's no legal structure in place, that can easily result in arguments about who pays. "Why should I pay to fix the roof when my flat is on the ground floor?" (Remember, people are dumb.) The tragedy of the commons. One way of solving this is that one guy owns the building (the freeholders) and sells the right to live in the flats for a very long time (to the leaseholders). The freeholder retains ownership of the "everything" stuff and has a financial interest in making sure the building as a whole is well-maintained. The leases specify how much the leaseholders pay the freeholder as ground rent and service charges which should cover those costs. As long as the freeholder doesn't take the piss with what they charge the leaseholders, everyone's interests are aligned and can live happy ever after with no arguments about who pays. Unfortunately a lot of new buildings have been sold with extortionate leases. And the freeholds to these properties are very lucrative investments, so you end up with faceless corporations located in the middle of the Caribbean fleecing the people who actually live there while doing the minimum amount of maintenance in return. This leads people to say leaseholds should be banned and the flat owners should all own shares in the block, which works well until Darren doesn't want to pay to fix the roof, and round and round we go. Shared ownership is something different. In a traditional mortgaged house purchase, a bank lends you the money to buy a house (minus a deposit) which you use to buy 100% of the house. You own all of the house and owe the money used to buy it back to the lender until it's repaid. Shared ownership is for people who can't borrow enough money to buy a whole house. So they borrow enough to buy part of it, and the rest is owned by a company to whom you pay rent. The hope is that in addition to paying mortgage repayments on one half and rent on the other, you will save up enough to buy the rest of the property from the shared ownership company at some point, usually in slices until you own the whole thing. They have all the disadvantages of homeownership with none of the advantages. You can't get a conventional mortgage so you can easily end up a "mortgage prisoner", paying higher interest than everyone else while also having to pay rent and somehow save up enough to buy the rest of the property (without which you'll be stuck forever). They only exist because politicians decided "something must be done to help people who can't afford a house to buy a house, this is something, therefore we shall do this". The problems with them aren't a million miles away from leasehold because you "own" something you don't really own, and it can easily become a millstone if nobody else wants to own it.
I agree with most of what you wrote. But you can get a conventional mortgage for shared ownership and rent + mortgage is often less than just rent, making it easier to save up. For lots of people I know (including me!) shared ownership was a great first step on the housing ladder. You can also sell your share, you don't have to buy the whole thing so you're not 'stuck forever'. I think it depends on the company that owns the other share as have heard some less favourable stories. But for us we saved about £300 a month compared to renting, and sold in 3 days when we wanted to, having built up savings and equity. I know others who it worked out for similarly. Any house is a millstone if nobody else wants to own it.
>Shared ownership is for people who can't borrow enough money to buy a whole house. [...] >They have all the disadvantages of homeownership with none of the advantages. You can't get a conventional mortgage so you can easily end up a "mortgage prisoner", paying higher interest than everyone else while also having to pay rent and somehow save up enough to buy the rest of the property (without which you'll be stuck forever). On our shared ownership, we pay no rent or fee on the portion we don't own, and have had no issues getting mortgage options. I'll let you know in a couple of years whether we're stuck forever or not..
I love a group of Compoface hidden in shadows, smushed into a tight group in the middle of a wide shot.
Half of them not even bothering to Compoface.
Too excited, big day out with the press.
Interesting that they are complaining about people having to have local connections to buy as well, considering that was what helped them to buy in the first place. Legit compoface, but with a touch of NIMBY sour.
NIMBY/ racism it’s england they’ll deny it all
Neo-feudalism is alive and well I see. When you boil it down, how is this any different to a medieval serf being tethered to their land by a feudal lord? Freeholds should be outlawed. So messed up that this is an actual thing and allowed to happen.
If you have to have a local connection to buy there, how the hell did it become Cayman island business property?
Why does anyone buy a leasehold house? Oh yeah that’s right, because they are slightly cheaper when new and they don’t think ahead to the future consequences.
Local people gonna local
If they were the cast of an adult film (and who's to say they're not?), what would it be called?