Alan Walker asks - What does the next five years have in store for leaseholders?

Let’s start with a Flat Living quiz. If the answer is “13 over the past 18 years”, what is the question? Some clues – the number refers to people in a particular public service role. Keith did it for two years but Kris only lasted 10 months. Grant was involved for five years, but for three of those as a shadow.

In case you haven’t guessed it, here’s the answer – how many housing ministers have there been since 1997? And as a follow up – how many of them can you name? Keith, Kris and Grant don’t count…

With such a regular turnover of ministers, and more than one of the 13 in post for less than a year, it is no surprise to find that some areas of the housing agenda are getting more attention than others – so are leaseholders getting left behind?

It’s been something of a mixed journey over the past 18 years. Successive Labour administrations looked at regulation of block managers but didn’t get as far as passing legislation. The Coalition made it clear pretty early on that self-regulation was the way forward for leasehold – but on the rental side chose to put time into legal protection for tenants by regulating letting agents and strengthening the regulatory regime in the private rented sector.

This is no bad thing of course – but some long leaseholders feel like Cinderella with no ministerial fairy godmother to look after them. The terminology soup – ‘virtual freehold’, ‘commonhold’, ‘leasehold, long lease, short lease’ – remains thick and hard to digest and there are lots of anomalies. Service charge payments are not protected whereas tenancy deposits are. And in some cases flat owners seem to be almost forgotten – draft Coalition flood relief provisions managed to exclude large numbers of leaseholders by proposing to disqualify residents in blocks with more than six units.

On the other hand, the results of a 12 month investigation by the Competition and Markets Authority between December 2013 and December 2014 suggested that the majority of leaseholders are happy in their flats and with the service they receive from their property managers. As a result, the CMA put forward no demands for regulation and readers may now be aware of the increasing strength of self-regulation in the sector – with ARMA-Q and the Property Ombudsman now playing their part.

Two key issues remain evident:

  • In some cases property managers are still perceived as overcharging and underservicing; and
  • The processes for making formal complaints on and resolving leasehold disputes are still opaque and tricky to navigate.

There is also clear anecdotal evidence – ask any property manager - that new owners (and even longstanding owners) of leasehold properties often don’t fully understand the terms of their ownership. Leasehold is complex. In simple terms it is a licence to occupy, with responsibility to contribute to certain costs while doing so. Handing over the agreed purchase price is not the end of the transaction. However, it is not uncommon for managing agents to receive indignant calls from flat owners in receipt of their first service charge bill to the effect that they have already paid for their property and so do not expect to have to pay any further monies.

With so many moving parts in the buying process, from satisfying mortgage lenders that your outgoings are suitably matched to your income, to checking whether a major infrastructure project threatens to block out the light to your bedroom window at some point in the near future, do prospective purchasers miss the chance to find out the detail of the terms of ownership they are entering into?

Should the spotlight fall on the estate agents who handle the sale? With an estimated five million leasehold properties in England and Wales, they may forget that a buyer – perhaps first time, almost certainly infrequent - is less clued up than they are themselves. So perhaps the solution to the problems surrounding our sector are not about regulation after all – but rather about a better understanding of leasehold and a smoother road to reparation, with redress where necessary. Minister – over to you.

Alan Walker is an RMC Director