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New Statesman
6 days ago
- Business
- New Statesman
Who is accountable in privatised Britain?
Illustration by Andy Carter / Ikon Images 'New, unadopted estate.' The Hitchin MP, Alistair Strathern, pointed. Then he gestured to a building site where diggers were enthusiastically getting to work. 'New estate that will be unadopted… Unadopted estate… Unadopted estate.' During the 20-minute drive from Shefford town centre to Hitchin Station, we passed at least six examples of the phenomenon Strathern had invited me to his constituency, which straddles the Bedfordshire-Hertfordshire border, to explore: new-build housing estates their councils have refused to adopt. Much has been written about leasehold, the peculiarly British 'feudal' system in which homebuyers own a property but not the land it sits on, leaving them liable for spiralling ground rent and management fees. After decades of advocacy, some improvements were made under the Conservatives in last year's Leasehold and Freehold Reform Act, and Labour has promised to go further with protections for leaseholders in this parliament. But even when new-build homes are sold with the freehold, hidden costs can sneak in. Known as 'fleecehold' housing, the estates Strathern pointed out are those where the responsibility for maintaining the roads, street lighting, drainage and communal areas has not been adopted by the council, as it deems development not to have been completed to a high enough standard. Until a development is adopted, the residents must pay for the services the council would usually provide, in addition to council tax, via yearly fees paid to private management companies. The fees themselves may not sound large – £200-£300 a year. Or, at least, that's the level at which they start out. At a new estate I visited, fees had been hiked by 41 per cent in a year, with vague explanations. Calls and emails to the management company went largely unanswered; correspondence was limited to scarily worded 'final demand' letters. If owners refuse to pay, management companies can go direct to their lender to have the charges added to their mortgage, tanking the owner's credit rating. Residents I met spoke of finding it impossible to determine what they were paying for, or to hold the management company accountable for the work it was – or wasn't – carrying out. Fleecehold is now the norm across the country. Whereas councils used to adopt new estates, the Competition and Markets Authority has found that 80 per cent of new homes built by the 11 largest developers in 2021-22 were sold under the fleecehold system, with £260m in estate management charges paid out in 2022 alone. There are stories of owners being assured their estate would be adopted as a formality, only to still be paying fees a decade on. Meanwhile, the government is pushing through planning reform to meet its target of 1.5 million new homes by the end of this parliament. The problem may not be as visceral as the issues with build quality that owners of new-builds often face: cracked walls, dodgy plumbing, damp and mould. But the two are inextricably linked. Every owner I spoke to about fleecehold charges also had a horror story of how their 'dream home' had turned into a nightmare of construction faults that developers were reluctant to rectify. One showed me a brimming lever-arch folder of his correspondence with the developer – 200 pages in 20 months. The question is one of accountability. When things go wrong, whose job is it to fix them? What happens if they fail to do so? And how are they seemingly able to charge what they like, with no cap on costs or any obligation to show how the money is spent? Subscribe to The New Statesman today from only £8.99 per month Subscribe You might imagine the council would step in. But, as I found out in Hitchin, cash-strapped local authorities have little incentive to ensure developments are built to standard, as adopting them means adopting additional costs. The developers, meanwhile, have little incentive to come back to complete repairs once the houses have been sold. Strathern, who worked on the Leasehold and Freehold Reform Bill committee, is hoping to change this and has introduced a debate in parliament on ensuring new estates are adopted on schedule. But it's hard to fix a problem most people don't even know exists until after they've bought their homes. Passing the accountability buck can be an art form. In Shefford, I visited Old Bridge Way: a 220m stretch of road through an industrial park connecting an estate of some 1,000 homes to the centre of town and a Morrisons. I stood there for ten minutes watching non-stop traffic navigate a maze of potholes six inches deep. Central Bedfordshire Council says this is not its responsibility, as it doesn't actually own that part of the road. Who does own it is an open question: the company responsible for it was liquidated in 2024, leaving it effectively ownerless. But I noticed double yellow lines along the kerbside. I asked the council if it was issuing parking fines for a road it claimed it had no responsibility for, but it did not offer an answer. A council that won't adopt a thoroughfare used by thousands of people is unlikely to adopt estates full of new homes. Strathern described both situations as 'hollowed-out councils retreating from the public realm'. To me, they resembled what the satirical science-fiction author Douglas Adams once termed a Somebody Else's Problem field, a way of concealing inconvenient things that utilises 'people's natural predisposition not to see anything they don't want to, weren't expecting, or can't explain'. For residents placed in fleecehold limbo the issues of rising fees and the lack of accountability are impossible to ignore. For everyone else, they are Somebody Else's Problem. [See also: GMB chief Gary Smith: 'Oil and gas is not the enemy'] Related
Metro
19-06-2025
- Business
- Metro
Savvy Brits are snagging cheaper homes thanks to new law
The upcoming Leasehold and Freehold Reform Act is set to make life easier for those wanting to get on the property ladder — and savvy buyers are taking advantage now. At the moment, homeowners with leasehold agreements – commonly seen in flats – don't own the land their property sits on, and need to make extra rental payments to the freeholder (sometimes known as a landlord). But the new act changes this, making it both cheaper and easier for people to either extend their leasehold, or buy the freehold themselves. While we're still waiting on the act to become law (it's recently been given Royal Assent), it means that people are now snapping up properties with short leases. Previously, these homes may not have been an attractive investment, given the considerable time, paperwork – and money – required to increase the terms of a lease. As such, they often stay on the market for longer than similar properties, or come with a lower price tag to reflect the additional cost to the new owner. You can access completely fee-free mortgage advice with London & Country (L&C) Mortgages, a partner of Metro. Customers benefit from: – Award winning service from the UK's leading mortgage broker – Expert advisors on hand 7 days a week – Access to 1000s of mortgage deals from across the market Unlike many mortgage brokers, L&C won't charge you a fee for their advice. Find out how much you could borrow online Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage. But with the changes outlined in the Leasehold and Freehold Reform Act expected to come into force at some point this year, some are now speculating that getting in on short lease homes before the change will pay off later. As Andrew Binstock, co-founder and auctioneer at Auction House London explains, buyers are increasingly keen to invest in homes that'll need the lease extending in a few years' time, in the hope that once this policy comes through, the renewal process will be a relative walk in the park. 'Short leasehold flats are attracting strong demand – we have offered over 150 so far this year,' Andrew told This Is Money, which he puts down to buyers' growing confidence around the reform. And, there are bargains to be had. A one-bedroom flat in upmarket Chelsea with just eight years left on the lease is up for auction with a guide price of just £120,000 – drastically below the area's average sale price of £1,272,260. Do we smell a potential steal? The Leasehold and Freehold Reform Act was passed in May 2024, but many of the measures are being introduced gradually. In a nutshell, it will: Make it both cheaper and easier for leaseholders to either extend their lease or buy their freehold by removing the need to pay the freeholders' costs and eradicating the marriage value (AKA the automatic increase in a property's worth after the lease has been extended). At present, the leaseholder has to share 50% of the increased value with the freeholder, which can be costly . Increase the standard lease extension term to 990 years Give more leaseholders the right to take over management of their building Ban new leasehold houses (with a few exceptions) Require landlords to be more transparent about service charges. As property expert and Yopa's national franchise director, Steve Anderson, tells Metro, it takes a lot of effort to increase the terms of a lease – and it can also be expensive. He explains: 'The task becomes greater the shorter the lease term gets and, in worst-case scenarios, failure to extend a lease can not only hit the value of a home, but ultimately, see ownership transferred back to the freeholder.' After buying a property, homeowners can ask to increase the lease term at any point – but as Steve notes, after two years, you're entitled to a 90-year extension as long as you're the qualifying tenant (AKA, the leaseholder who owns the property's lease). 'This is almost always the case if your original lease was for more than 21 years,' he adds. So, how short is a short lease? Generally speaking, properties with less than 80 years remaining fall into this bracket. While the new law won't change the definition of a short lease, it'll increase the standard extension length to 990 years. Historically, there's been relative risk in buying a short lease home as it can make it harder to sell on in the future. However, once the new laws have come into effect, it'll be easier and cheaper to extend the lease anyhow. So, those buying a short lease home now might be hoping to snap up a cheap bargain, with the hopes of extending it and pocketing a profit later on. Extending a lease can take anywhere between three and 12 months and involves the following steps: Notifying the freeholder of your intention to extend the lease Hiring a solicitor who specialises in leasehold extension, as well as a surveyor Submitting an offer to the freeholder Negotiating the terms of the extension with the freeholder and agreeing a price Paying the deposit, which should be done within 14 days of giving the leaseholder notice. This usually costs either £250 or 10% of the lease cost agreed in the notice Completing the lease extension by paying the extension costs, as well as any fees (i.e. to the solicitor and surveyor). After the extension costs and legal fees have been accounted for, renewing a lease of 90 years can cost around £8,500. But with anything under 90 years, the fees can really start to stack up. 'If looking to extend a lease of just 60 years, this cost increases to as much as £32,000, so it really does make sense to do this earlier rather than later,' Steve says. However, standard lease terms will be increased to 990 years with Labour's new legislation (making a property more attractive to future buyers as they won't have to renew again down the line) and sometimes hefty ground rents could be 'essentially reduced to zero [known as a peppercorn] upon payment of a premium.' 'Leaseholders will be able to extend their lease by a new standard 990 years with a ground rent at zero,' Steve adds. 'This is a substantial increase from the previous 90-year extension for flats and 50 years for houses, thus providing greater long-term security.' In addition, the outlay associated with renewal would be lower, alongside the extra value added as a result of extending the lease no longer needing to be split with the freeholder (marriage value). For many, that could make the whole rigmarole more worthwhile. 'Purchasing a leasehold property could become more appealing to homebuyers and, in doing so, they could save themselves some money in the process,' Steve says. More Trending 'A property with 70 to 80 years remaining on the lease could be subject to discounts as high as 15% on average, which equates to £40,000 on the current average UK house price.' Buyers with a remaining lease term of around 50 years could nab themselves an even bigger bargain, as Steve predicts there could be discounts of up to 25% on market value, which equates to £68,000 off the average home. View More » But the bottom line is, while it might be tempting to bank on costs being lower in the future, you'll need to consider the risk in waiting for the law to come through in full. If things don't go to plan, you could be left hanging – and crucially, burdened with the cost of a leasehold extension. Do you have a story to share? Get in touch by emailing MetroLifestyleTeam@ MORE: Dad left 'in misery' after ceiling collapses three times in London home MORE: This 'soulless' UK town is being knocked down and locals are surprisingly on board MORE: The 'friendly' UK town homebuyers are flocking to — where properties cost £159,176
South Wales Argus
19-06-2025
- Business
- South Wales Argus
Call for action on ‘fleecehold scandal' from Senedd members
Hefin David warned people living on Redrow's Cwm Calon estate in Ystrad Mynach have just had their third increase in as many years. The Caerphilly Senedd member said the management company, Meadfleet, provides a disgracefully substandard service in return. Dr David told the Senedd that residents need an opportunity to change management company and make complaints to get the improvements But he cautioned that the Leasehold and Freehold Reform Act, which would give people more power to challenge estate management companies, has yet to be operationalised. Dr David pointed to statistics from the Competition and Markets Authority, which show that 80 per cent of new developments are subject to leasehold. He said: 'We need to think about what more we can do to prevent more unadopted estates from becoming the norm before we act. There are too many in Wales… in that position.' He supported a private members' bill, introduced by his Labour colleague Alistair Strathern in Westminster, which would go further than the law introduced by the Conservatives. Quizzing Wales' first minister in the Senedd on June 17, Dr David welcomed the 'very good' recommendations of a petitions committee report on the so-called fleecehold scandal. The politician urged the Welsh Government to press UK ministers, 'so these scandals across Wales and the UK can be prevented from happening in the future'. Eluned Morgan, who has served as first minister since August, acknowledged that leaseholders have faced long-running issues with estate management charges. 'People are struggling with the cost of living… without this kind of thing on top,' she said. Baroness Morgan told Senedd members that housing secretary Jayne Bryant will set out the Welsh Government's response to the petitions committee's recommendations in July. She added that the UK Government intends to go further by introducing a new leasehold and commonhold reform bill by the end of the year to 'plug gaps left by the last government'. Laura Anne Jones, the Conservatives' shadow housing secretary, urged governments at both ends of the M4 to 'get to grips' with the Wales-wide problem.
Yahoo
03-03-2025
- Business
- Yahoo
Labour to ban centuries-old leasehold system in England and Wales
Labour will ban the sale of new leasehold homes by the end of this parliament in what ministers described as the end for a centuries-old 'feudal' system. Leasehold systems, where third-party landlords own the building belonging to several flats, will be replaced with 'commonhold' schemes, which will see all owners have more control over the buildings in which they live. New buildings will no longer pay 'ground rent', which is the charge currently owed to landlords for use of the land, and forfeiture of properties will be banned, a white paper published on Monday proposed. Owners will be expected to vote on the annual budget for the building, and what their service charges will be. A full draft of the legislation will be published later this year. Matthew Pennycook, the housing minister, said: 'This Government promised not only to provide immediate relief to leaseholders suffering now but to do what is necessary to bring the feudal leasehold system to an end – and that is precisely what we are doing. 'By taking decisive steps to reinvigorate commonhold and make it the default tenure, we will ensure that it is homeowners, not third-party landlords, who will own the buildings they live in and have a greater say in how their home is managed and the bills they pay. 'These reforms mark the beginning of the end for a system that has seen millions of homeowners subject to unfair practices and unreasonable costs at the hands of their landlords, and build on our Plan for Change commitments to drive up living standards and create a housing system fit for the 21st century.' There are 4.8 million leasehold properties in England, equivalent to a fifth of English housing stock. Last October, Mr Pennycook warned that leasehold reform could take as long as five years, describing it as a 'whole of Parliament commitment'. In its manifesto, Labour said it would 'ban new leasehold flats and ensure commonhold is the default tenure'. The party went on to reiterate this promise in the King's Speech, also promising to regulate ground rents and to 'act quickly' to implement its reforms. In May 2023, Lisa Nandy, the then-shadow housing secretary, said a future Labour government would bring forward legislation to abolish leasehold within 100 days. But in April, the party quietly dropped this pledge. The previous Conservative government passed the Leasehold and Freehold Reform Act in the final days of its administration, but the legislation was significantly watered down, and did not deliver many of Michael Gove's promised changes. Mr Gove had previously proposed a ban on the sale of new leasehold homes. Campaigners have argued for years that the leasehold system trapped owners in homes which were poorly maintained, paying thousands of pounds every year in service charges. Service charges for leaseholders rose by 11pc between 2023 and 2024, according to estate agents Hamptons, to an average of £2,300. Katie Kendrick, the founder of the National Leasehold Campaign, told the BBC it was 'paramount' that those already living in leasehold buildings were not left behind by the new legislation. She said: 'While focusing on preventing future leasehold abuses is crucial, it's equally vital to address the plight of existing leaseholders currently bound by the inequitable leasehold system. 'Commonhold conversion mechanisms are essential to offer an escape route for those trapped.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
