Nigel Wilkins: Key Objectives For Leasehold Reform

Leasehold Life is very pleased to have been given the opportunity to reproduce this article written by Nigel Wilkins, who is not only the Chairman of CARL (Campaign for the Abolition of Residential Leasehold). Nigel has represented the interests of leaseholders over a number of years, not just by regular communication with Government and providing input to the Commonhold and Leasehold Reform Act 2002 but also in the media, appearing on Radio 4's Money Box programme and writing for the Guardian and the Daily Telegraph.

He was requested by Grant Shapps to submit the organisation's key objectives for leasehold reform.

'I have been exchanging e-mails with the new housing minister for quite a few weeks now, which is something never achieved with Labour ministers, despite my membership for a number of years of the executive committee of the Labour Housing Group.  I am hoping he will do for the leasehold system what Ken Clarke has done to the prison service, not least because there are a few interesting parallels'.

'When CARL was set up more than ten years ago, we issued a manifesto with 5 key objectives: 

1. The introduction of commonhold;
2. Abolition of the residential leasehold system;
3. The automatic right to transfer from leasehold to commonhold;
4. Transfer to commohold to be at a fair price;
5. Special measures for those unable to enjoy the benefit of commonhold.

Since then of course, we have seen the implementation of the Commonhold and Leasehold Reform Act 2002, which has introduced commonhold as a largely theoretical concept. Our revised objectives are as follows:'

1. Make commonhold compulsory for all new developments of blocks of flats.  Since commonhold – a much fairer system of tenure than leasehold – is now available, there is no reason why any more new residential leases should be sold. Hardly any other countries have leasehold tenure;
2. England and Wales should follow the lead of our immediate neighbours, Scotland and Ireland, in having legislation in place specifically designed to abolish leasehold tenure;
3. Enable leaseholders who buy their freeholds to transfer directly to commonhold on the basis of a simple majority vote.  Perhaps a route could be found to allow individual leaseholders to switch direct to commonhold tenure;
4. Establish a simple formula to determine the transfer price from leasehold to commonhold, set at a level that is fair to all parties. This should recognise that the leasehold interest has paid in full for the land, the construction of the property, its repair and maintenance, and have also contributed substantially to the profits of the landlord/developer.  Moreover, leaseholders will also have paid for all the standard scams and frauds pulled on them by landlords and managing agents over the years. The Irish land registry has a simple formula in place to value the freehold.  If the lease has more than 15 years to run, the freehold is valued at a multiple of the annual ground rent.  If the lease has less than 15 years to run, the valuation is also linked to the market value of the property.  However, at no point are leaseholders required to pay more than one-eighth of the market value of their homes;
5. End forfeiture, since this process enables landlords to recover a huge multiple of service charges/ground rent due, and thereby breaches article 1 protocol 1 of the European Convention on Human Rights. Require all landlords to subscribe to the housing ombudsman scheme so that all parties have direct access to a straightforward and inexpensive method of resolving disputes, rather than the costly RPTS.  Step up enforcement procedures against criminal landlords by centralising the prosecution service away from ineffectual local authorities. Reduce costs by taking away the responsibility of LEASE towards advising well-funded landlords and solicitors, thereby limiting its responsibilities solely to advising leaseholders.