Do I need to try and get rid of my flat now

[tropicalroses]

Based on the news the government is looking at banning new leasehold agreements, should I try and sell my flat now?

I was looking at selling in the next 2 or 3 years and moving to a house, should I try and pull my purchase forwards even though it will be a squeeze financially, on the basis that the desirability of leasehold flats will go through the floor when this happens? https://www.bbc.co.uk/news/articles/cvgezyz31jlo

Won't flats be more attractive to potential purchasers when leaseholds are abolished?

It’s only for new builds, old flats won’t feel the benefit until they get that part through parliament, which is currently mooted to take four years.

Yes!

Not really as once there is a owner management company in place the owners have better control of the develpment. And that "freehold" company is a not for profit organisation.

When you sell the property there are 2 elements
• The property lease.
• The voting share in the company which owns all the common spaces.

The disadvantage is that as a voting member the property owner needs to be active and become or appoint directors and approve the annual budget plus pick service suppliers and agree schedules of work.
Its not passively paying the service fee.

As a fellow leaseholder this is worrying. I've been waiting for them to pull their finger out and implement the leasehold reform bill and the new way of calculating lease extensions. Mine's at 90 years and want to extend but don't want to pay over the odds if the new system is cheaper. But seeing this makes me think I should get out now,

There is this section of the article that makes a nod towards this problem, but will they act on it? As mentioned it will probably take forever. Mr Pennycook said the government would "continue to implement reforms to help millions of leaseholders who are currently suffering".
"Want we don't want is a two-tier system," he told the BBC.
"All existing leaseholders in blocks will be able to convert to commonhold," he said, adding the government will introduce a system that makes it "very easy" to do so, with a draft plan set to be outlined later this year.

Although if, like me your block is part leaseholders and part council tenants, I don't think this notion is always going to work. And to make it fair, they'd need to bring in the option to convert to commonhold at the same time as abolishing new leaseholds.

It's all so hair raising. These reforms were meant to make things better for leaseholders, not worry this living daylights out of existing leaseholders and help only future flat owners.

How will the landowners that the property is built on get recompensed for the loss of the income from the leases built on their property?

As I understand it, the lease is effectively rent for the land the property is on. Will that land come into the ownership of the people who live in the fakes on the land?

Much as I don't like the concept of leasehold, and have always avoided buying a leasehold house, don't the landowners stand to lose their assets?

Yes thats how i see it too. I doubt anything will ever change for current leases unless we have to pay through the roof for it

The ban on leaseholds will only affect new flats that are built, not the millions of existing ones.

It will take very a long time for the stock of new build commonhold flats to build up to such an extent that it impacts the value of existing leasehold flats.

@NeonGiraffe I wouldn't panic at the moment. I am concerned about being asked to pay for a share of commonhold that I don't actually want! But there's nothing I can do about it and I think they may end up having to do this in a staged way or some such.

I actually left a shared freehold and it was a bloody nightmare. The development I live on now is big enough that we always have to have a management company. I don't think anyone would be mad enough to try and manage it themselves.

I have a 999 year lease though, which I gather makes a difference.

oh have they confirmed that already?

Yes, the proposed legislation only impacts new build flats. There may in future be legislation regarding existing leaseholds, but that is far more complex and would be a long way off.

That's not what the government are saying. This is . . .

• Major change will give homeowners a stake in the ownership of their buildings and will hand them more power, control and security over their homes.
• Change will ensure flat owners are not second-class homeowners and that the unfair feudal leasehold system is brought to an end, building on the Plan for Change ambition to drive up living standards

Yes it is exactly what the government are saying.

From the gov.uk website - ‘new leasehold flats to be banned...’

www.gov.uk/government/news/beginning-of-the-end-for-the-feudal-leasehold-system

If its a new build the developer is pricing in the cost of the land and development of the common areas.

Its the same as a developer costs building houses and roads on a greenfield site and selling off the individual homes and handing over the roads and green areas to a LA

Two words.............fire doors

Perhaps you could expand… it’s not like Mumsnet charges by the word.

My concern is that if I come to sell my flat anyone will want a new build and I'll be competing against them regardless. Also we have seen mortgage companies reticent to lend when there is uncertainty over an issue (i.e cladding) and even if I can find a buyer mortgage companies may well be stricter or undervalue the property?

It is the uncertainty around this legislation that is worrying me. We'll do this for now and sort that out later.... it all needs to be done at once I think

The issue with the start of new legislation will be the banks are lending into a new product, community owned property when the average buyer of a flat is expecting to have someone else do the grunt work of owning a building.
So there will be good developmemts where the buyers organise good management and ones where some buyers dont think they should have to pay any annual fee as they did not buy the lease from a "landlord".
Plus for new builds requirement of sinking fund pricing for jobs 10-20 years out will mean that the annual fee will become a factor across all lease owned properties.

As someone who sold a leasehold flat last year, you're already competing with new builds to some degree. Unless you have a particularly aesthetic Victorian conversion or similar, standard leasehold flats can't compete with new builds while mortgage rates are high- new build developers can afford to do better prices and 5% deposits. That is what we were told when we were selling and it certainly turned out to be true in our case.

I'm not sure this actually solves any problem.

As I see it at the moment the main problem is rip off leasehold companies charging too much for maintenance etc.

I believe it is possible to club together as leaseholders and become the management company yourselves if you wish by forcing a sale. I guess this is sometimes limited by certain members of the block not wanting to do this.

However, once you go down that route, it means that the holders are then constantly in a battle with each other over what does and doesn't need doing, my guess is with some of them refusing to cough up for what are necessary repairs (see the private roads issue).

So all you are doing is just swapping one issue for another. That's my take on it anyway.

GasPanic Ireland introduced legislation in 2011 after the property crash when developers and management holding companies went bust so stuff like fire alarms were not working due to no service contracts.

The law has provisions for the annual expenditure and sinking fund items.
So the leasehold company transfers areas and the leases into an shareholder/unithowner owned company with directors who have a legal obligation to manage the complex as a whole.
The budget is agreed by vote but if the members dont pass the new budget the prior annual fee rolled over.

The directors also have the legal right to sue for the annual fee and attach the debt to the unit.
Its a catch22 situation as if the company goes bust due to nonpayment of fees the unitowner cant sell their property on anyway as leaseholder signoff is not possible.
And even if there is no court case the directors will not sign the lease or say the unit is debt free without the annual fees being up to date.

The maintenance of common areas has to be paid for regardless of the management and ownership structure.

Share of freehold or commonhold allows for more control, but it does not make those costs go away.

I am the chair alessee owned freehold company at the mpment. It is astonishing how many new lessee think because they "own the freehold" that somehow service charges shouldn't exist.

Share of freehold is already pretty common on exisiting private blocks of flats in the UK, so I would be keen that any new legislatation does not reivent the wheel there.

I own a leasehold in a share of freehold block where half participated and half didn't. I actually think that developers would vote with their feet and refuse to build many commonhold flats and switch to build to rent which is more profitable.

When I bought my 1930s flat, I could have gotten a 40% extra loan to buy under help to buy if I bought new build. I still chose to buy my 1930s flat cos I didn't want to live in the area the new builds were mostly in.

However I am thinking of moving to a share of freehold flat sooner rather than later.. I have a leasehold but in a block where residents have bought the freehold so there is more control. Leaseholders can also be directors of the residents management company