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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think it's wrong that a flat can be confiscated without compensation

55 replies

DisconcertedAndRetired · 26/07/2015 08:43

If you "own" a flat in England it will be leasehold. The lease will have various obligations, such as you have to pay the ground rent and management charges, not cause a nuisance, maintain certain things, etc. Apparently if you do not comply with the terms of the lease, the lease can be cancelled. That's your property gone, forever, possible hundreds of thousand of pounds down the toilet, no compensation.

In the case I'm about to link to, apparently a lady didn't pay £600 in ground rent, and lost a £100,000 flat.

www.bailii.org/ew/cases/EWHC/QB/2013/2304.html

(I haven't read the details myself, I'm going by a summary elsewhere as to what happened.)

I would have thought that if a lease is cancelled and a flat sold off, that any money left over after any actual debt and legal costs are paid should be returned to the former owner. But apparently that's not the case.

Among other things, the lease on my flat says no pets allowed, no laundry to be visible through the windows. So if the freeholder notices a goldfish in a bowl when they look through the window, or a sock hanging on an air-dryer, does that mean several hundred thousand pounds down the drain, and a nice profit for them?

I don't have in issue with leases being cancelled, as a last resort, my issue is purely that the freeholder should not get any reward other than money owed and legal costs recovered, and an undesirable lease-holder evicted.

The lady in that case claimed that she didn't know about the court proceedings till after her flat had been taken off her. She lived elsewhere so didn't get notice that was served. I don't care about the truth or otherwise of any of that: the bottom line is that the best part of £100,000 should have been returned to her, whatever (if anything) she did wrong. But the law does not require that.

OP posts:
lighteningirl · 26/07/2015 08:53

No its not wrong. She bought the lease failed to adhere to the rules didn't pay ground rent or maintenance after several years of proceedings which she ignored/failed to be available for she lost the lease. She's a moron.

DamsonInDistress · 26/07/2015 08:54

Then don't break the lease contract agreement. It's not rocket science. ..

ThroughThickAndThin01 · 26/07/2015 08:59

Yabu. Leasehold properties offer buyers more scope for properties to buy and are often cheaper than freehold. Stick to the conditions of the lease and there isn't a problem.

Namehanger · 26/07/2015 09:00

Residential leases can be forfeited for breach of covenant such as not paying ground rent. but where the covenant can be rectified such as paying rent then pay the rent no problem. Courts will be normally be lenient with residential tenants, but if she didn't turn up at court then only has herself to blame...

TheCatsMother99 · 26/07/2015 09:00

That's leasehold and if you're purchasing a leasehold property you should be fully aware that's how it works.... That technically you are long term renting the property & so there are regulations you must adhere to.

Forfeiture rarely happens, because usually you wouldn't actually take anything as far as that over a smaller debt than the property is worth but I have heard of a handful of cases (like this one) where it's happened.

musicalbingo · 26/07/2015 09:03

Had a quick read....
It does seems a bit crazy but it is odd she stopped paying service charge and ground rent...?

I think YANBU on the basis that in London at least freeholds are now considered a licence to print money by developers (think £500 ground rent and £2k service for a large house converted into 6 flats) they would probably jump at the chance to recoup the flat to sell a second time...

LazyLouLou · 26/07/2015 09:08

Her little list of excuses are not defence. She bought the flat and would have been made aware of the lease regulations at that time.

You pay rent up front for 99 years. If you miss any of the additional payment you forfeit that rent. That is what a leasehold is, if the lease is not owned by those buying flats. If that is the case then it is common sense to assume that if the landlord will be willing to proceed legally if a renter stops paying their dues.

When we owned a flat I was the Company Secretary. We had to threaten such a foreclosure against 1 arrogant shite who refused to pay any of the management fees - his stated reason was that no woman was going to scam any money out of him!!! That meant we couldn't afford buildings insurance or redecoration costs, no one else wanted pay more, why should they? The owner was renting the flat out, making a nice monthly profit, and went absolutely ballistic when he received his letter of intent. He came within about 6 weeks of losing his property over a £400 bill.

If you own a flat on leasehold yu have to comply with the lease, just as you would with car hire T+Cs, shop leases, etc etc

[Just as an aside: after our nasty man's many comments about women I asked our solicitor if one of the women in the company could take the case on. They all smiled and, as far as I know every communication he had on the matter was from a woman Smile ]

Original poster
DisconcertedAndRetired · 26/07/2015 09:20

He came within about 6 weeks of losing his property over a £400 bill.

I have no problem with him losing his property. My problem is with you getting say £500,000 because he didn't pay you £400 he owed. I think you should have got, at most, £400, plus legal costs, plus (being generous) even a penalty fee. May you should have got £5000 as a consequence of him not paying £400. There is no way you should get £500,000 (which is what a two-bedroom flat costs in my area.)

OP posts:
Micah · 26/07/2015 09:20

If you "own" a flat in England it will be leasehold

Not necessarily. There are many flats where owners have a share of the freehold.

DamsonInDistress · 26/07/2015 09:25

You may have a problem with it Disconcerted, but clearly the idiot owners don't if they're prepared to loose their homes by not paying a charge they will have known about when signing the contract...

Original poster
DisconcertedAndRetired · 26/07/2015 09:34

Not necessarily. There are many flats where owners have a share of the freehold

How will that help? I own a share of my freehold. It is worth one hundredth of the lease. So I would only lose 99% of my property value if the landlord took a dislike to my goldfish?

OP posts:
Original poster
DisconcertedAndRetired · 26/07/2015 09:38

but clearly the idiot owners don't if they're prepared to loose their homes by not paying a charge they will have known about when signing the contract

I have a sinking feeling that if we were talking about summary execution as the punishment for littering, there would be just as many people defending that, on the grounds that it's not hard to avoid littering. (Never mind that it is easy to imagine a scenario where a conscientious person might inadvertently do so.)

OP posts:
DamsonInDistress · 26/07/2015 09:47

I've lived in leasehold flats many times do I'm not entirely unsympathetic to the difficulties, but not paying the ground rent isn't negotiable. It's something that is mentioned time and time again by solicitors and estate agents prior to signing, and for it to get to the point of court proceedings which can take years, then yes, the owners are idiots.

AwakeCantSleep · 26/07/2015 09:48

YANBU. Leasehold is a remnant from the feudal era. There are far better (for flat owners) ways to organise ownership and maintenance of common parts. If I was in charge of legislation I'd abandon leasehold in favour of something like commonhold.

DamsonInDistress · 26/07/2015 09:48

Oh and sod off with your silly comparisons to the death penalty, you belittle your own arguments by doing so.

Micah · 26/07/2015 09:53

How will that help? I own a share of my freehold. It is worth one hundredth of the lease. So I would only lose 99% of my property value if the landlord took a dislike to my goldfish?

Er because you don't have a landlord. All the flat owners share ownership of the land the flats stand on, so there is no leaseholder to pay rent to.

You don't have a lease.

LavenderLeigh · 26/07/2015 09:54

A lease is a contract.
You default on your part on the contract, in which the penalties will be spelt out, then of course you lose the lot. Your argument is akin to expecting an employer to keep paying NI contributions for an employee who was sacked.

You would have to be a special. Kind of idiot to expect anything other than return of the property to the lease holder if you refuse to pay the ground rent.

However, if you default on a mortgag, then there are provisions in law as to the distribution of funds if the property is sold and the debt paid off.

LazyLouLou · 26/07/2015 09:55

This reply has been deleted

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KittensOnAPlane · 26/07/2015 10:05

I agree with you, the 'punishment' far outweighs the 'crime'

Its like punishing someone who shoplifts a mars bar in the same way as someone who does a massive fraud. Its imbalanced.

fastdaytears · 26/07/2015 10:19

Disconcerted if you own a share of your freehold then who do you think your landlord is?

fastdaytears · 26/07/2015 10:21

Also, a freehold flat is not impossible anyway. It's weird but there are some around.

AwakeCantSleep · 26/07/2015 10:24

Micah even if you own a share of the freehold you still have a lease, and it will need renewing. In a way you are wearing two hats: one as leaseholder, and one as a director of the management company of the building who owns the freehold.

Pure freehold flats are very rare I believe, and extremely difficult (if not impossible) to get a mortgage for.

AwakeCantSleep · 26/07/2015 10:25

that owns the freehold, not who.

Micah · 26/07/2015 10:29

I'm lost then.

When I had a flat it was share of freehold. So no lease. No leaseholder.

Management company was an entirely separate thing, responsible for the upkeep and maintenance of communal areas. Everyone paid service fees towards this, and residents had a commitee to decide how best to spend funds. The other alternative was to employ a management company to deal with it and pay them.

There was no lease to renew on the ground the building stood on, and no landlord to pay. Sell your flat, you sold on the leasehold share with it.

Micah · 26/07/2015 10:30

Freehold share, not leasehold.

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