I completed and passed my Solicitors Finals in February 1969 before applying to go on VSO (Voluntary Service Overseas). I was sent to teach English to tin miners in Indonesia as you do. When I returned in October 1972 to undertake Articles to train as a lawyer, I was asked to tackle a ‘Freehold Reversion’ issue. I had forgotten the difference between Freehold and Leasehold titles much to the chagrin of the employee at Alsops who wondered how the firm could have taken on this dumbo.

A lease is a contractual right to occupy a property for a defined period of time. But what if the lease is for 999 years? Surely that is as good as a freehold; the freeholder can’t get their hands on the property for a very long time. The answer is that it all depends on the rights of the freeholder granted under the lease and what if any ground rent is being charged in between; and can the ground rent be increased?

There are very respectable reasons for having a long leasehold scheme. For example, if you buy a flat in a development where many flats are in alternative ownership, you need a scheme to keep the roof, common parts and garden of the premises in good repair. The freeholder may be a management company to which all leaseholders pay a ground rent to cover the communal costs. In a good scheme, Leaseholders will have a say about how the scheme is managed. Likewise in a new build development, there may be common areas which need landscaping and maintaining and a freeholder arrangement is for a common benefit.

However, some Leasehold schemes have become a means for the builder to make extra profit. Developer builders can grant long leases to buyers of their shiny new homes with ground rent levels, modest for the first couple years then increasing rapidly as time goes by. They offer freeholds on purchase for a modest extra fee say £3000 but for hard pressed buyers, at the time, this is a £3000 step too far. So the buyers put off the purchase and then find prices have skyrocketed as ground rents have increased. They are then locked into paying incrementally increasing annual rents or paying the asking prices for the freehold purchase. 

Leaseholder Enfranchisement rights give long leaseholders a legal right to acquire the freehold for a price but Freeholders can make these arrangements difficult to operate if they do not want to sell. The government in the past banned what were called Freehold Rent Charges which operated in a similar way and we are pleased that the Government is proposing to ban Leasehold interests which serve no useful legal purpose. Such schemes can become a nightmare for the home owner and the Government is right to take action.

In short, leaseholds interests can be a legal minefield which require very careful handling. We will do our best to make a difference by taking you through the process and ensuring that you understand what you are agreeing including taking on some calculated risks. If I failed to grasp the issues when I first started, no one should be surprised that leases do take time to understand. However following the announcement yesterday, some of the worse aspects of leaseholds appear to be on the way out.