Mick Platt is the Director of the Residential Freehold Affiliation, an organisation centered on guaranteeing the security and sustainability of leasehold buildings.
In a latest article for ConservativeHome, Harry Scoffin from the Leasehold Information Partnership argued that abolishing leaseholds on condo buildings is central to reviving the Tory dream of a “property-owning democracy”.
Because the Director of the Residential Freehold Affiliation, I can inform you it received’t be a dream, and it actually isn’t democratic.
Previously few years, this Authorities has launched into an irresponsible conflict with freeholders, seemingly for superficial political enchantment. They’ve willingly and recklessly fed a false narrative that every one constructing homeowners merely take cash for nothing, cost extreme charges, and ship little to the broader financial system.
This narrative fully ignores the function skilled freeholders the truth is play in sustaining condo buildings, and disregards the burden that will be imposed on residents if skilled freeholders had been eliminated.
Removed from being a dream, the Authorities’s plan to abolish leaseholds on condo buildings will probably be a nightmare for almost all of residents and is unlikely to make the Conservative Get together standard within the long-term. There are three key the reason why that is the case.
Firstly, there’s sturdy proof to counsel it received’t produce the specified consequence – and also you solely must look to Scotland to see this borne out.
One of many predominant alternate options that has been proposed to interchange leasehold is a commonhold system – the place, in impact, residents handle their buildings. The property tenure in Scotland may be very near this – and it has been a powerful, and admittedly harmful, failure.
In Harry’s article, he has made the faulty declare that Scotland is a rustic through which “commonholds flourish”. Whereas commonhold could also be applicable for smaller condo buildings the place residents can extra simply assume administration of a constructing, it’s irresponsible to advocate for such a system in bigger, extra advanced buildings.
In Scotland, if the roof of a big condo constructing wants repairing attributable to leaking, the highest flooring’s residents who’re affected by it will want to lift cash from others within the constructing to hold out repairs. Some leaseholders within the constructing might not reside there, which means there’s issue in tracing them. Some residents might disagree with what components of the buildings have a ‘communal duty’ and wish communal funding.
The ensuing delays and difficulties resolving what would in any other case be easy points for an unbiased freeholder typically means the required repairs will not be completed. Latest research, together with a latest BBC2 documentary, counsel that fifty per cent of all properties in Scotland are in “crucial disrepair” as a result of there isn’t any legally enforced upkeep system for buildings.
That is the destiny that awaits condo blocks in England in 10-20 years’ time.
Secondly, it will quantity to an enormous added burden for leaseholders in condo buildings, due to the duties they would want to tackle. Skilled freeholders of enormous condo buildings fulfil an important stewardship function, overseeing the upkeep, security and sustainability of constructing buildings and communal areas, and taking up important duty for the constructing as an entire, comparable to insurance coverage and complying with legislative necessities.
If the Authorities had been to scrap the freehold mannequin in England, these duties can be transferred to leaseholders. Many have no idea that is coming – and nearly all of people who do will not be pleased about it, as analysis by Savanta final 12 months demonstrates.
The UK’s constructing security disaster won’t be resolved via a transition to commonhold. In actuality, it should worsen the plight of these residing in harmful buildings who don’t have the time, {qualifications} or experience to imagine the administration duties of people who the Authorities is set to drive out.
Lastly, one other consequence of abolishing leasehold is the damaging affect it should have on investor confidence – one thing you’ll hope can be a precedence for a Conservative authorities at a time of stagnant financial development.
Each candidates at the moment vying to be our subsequent prime minister have promised to make use of tax levers to spur enterprise funding, seemingly forgetting the misguided mission that the Division for Levelling Up, Housing and Communities is on which is able to do the precise reverse. Earlier governments have made comparable errors, with each the Tories and Labour doubling down on hire controls all through the Seventies. The results of this was a severe hit to investor confidence which took a long time to recuperate from.
Presently, investor confidence on this area is being undermined by the Authorities’s weird anti-business rhetoric and the housing division’s muddled coverage agenda.
Briefly, the present Authorities’s conflict on leasehold is pointless, impractical and will definitely be unpopular as soon as the general public realise what it means in observe. The Conservative Get together must be alarmed on the probably affect this can have on its relationship with the enterprise group and with voters. I’d urge whoever turns into prime minister on September 6 to ditch this coverage – and cease the dream of house possession changing into a nightmare for a lot of.
