Leasehold is a Positive Tenure and Needs to Stay
By Lorraine Collis I 22 April 2024
Our Chief Executive Lorraine Collis argues we should better regulate managing agents but refrain from condemning Leasehold as a tenure, as some campaigners do.
A recent article by the BBC surrounding the unfortunate experience of a leaseholder has further stimulated anti-leasehold campaigner's demands for a ban on the tenure.
The reality is that leasehold offers huge protection for the majority of leaseholders with its laws and history dating back over 800 years corresponding with the formation of the Magna Carta in 1215.
The calls to ban leasehold, in my view, are very short sighted. Imagine asking a large group of people to live harmoniously together without any real guidance? It would be an impossible task and only those with the loudest voices would be heard which would be unfair, unpopular, and potentially harmful to less vocal occupiers.
On the other hand, it's vital to differentiate between multiple occupancy developments and houses; I don't believe there's a place for leasehold houses as they are stand-alone properties that have little to no impact on others.
Instead of scaremongering, we need clarity and reassurance so individuals can understand how their lease will work in their favour, alongside the legislation, if they are engaged in clear dialogue with their managing agent.
“The reality is that leasehold offers huge protection for the majority of leaseholders with its laws and history dating back over 8OO years”
In accordance with the lease, landlords and managing agents are required to act impartially to ensure residents are contented, safe and secure. The lease itself offers assurance that issues can be resolved using the mechanisms within it.
For example, with anti-social behaviour - the 'quiet peaceful enjoyment' clause is designed to support any action that the managing agent or landlord may take in the best interest of leaseholders. It works both ways; the lease contract provides landlords with protection, including the means of successfully recovering unpaid service charges.
We need to be wary of the headlines claiming leaseholders are paying thousands of pounds in service charges and are helpless to be able to make challenges because these are fundamentally incorrect. Our industry benefits from the First Tier Tribunal (FTT) - a specialised property court of law. If a leaseholder believes they are paying too much in service charge, there's nothing stopping them applying to the FTT which will determine whether the charges are reasonable. Leaseholders may challenge property defects or disagreements with the actions of their managing agent/landlord.
Landlords and managing agents also have strict legislation to adhere to when spending service charge funds under s20 of the Landlord and Tenant Act 1985, and any challenges of this nature can be heard by the FTT.
So, what is the way forward for the leasehold industry? There is no doubt there are a few bad apples in the industry ruining it for the rest. RLHA is not-for-profit and doesn't charge commissions, nor engage in unethical practices such as applying hidden charges on top of service charge costs for things like insurance claims, approving contractors (some even take a cut from contractor payments) or charging for meetings and letters.
It has been previously suggested that our industry become regulated. To those of us with serious concerns about the rogue practices some of our counterparts were engaging in, this plan was welcomed as the best way to ensure transparency, but these plans were sadly derailed.
I fully advocate for regulation because being an ethical landlord and managing agent is evidently possible and is happening; RLHA is an example of this in practice. It isn't a wildly financially lucrative business, but I strongly feel that it is one that can be delivered ethically and to the satisfaction of the majority within the current confines of leasehold legislation. Where it all seems to fall over is when managing agents are intent on becoming heavy cash generating machines.
“Communication is a key aspect that managing agents shouldn’t shy away from as lack of it only results in unclear, “opaque” practices”
Why not regulate the leasehold market and be more stringent with landlords and managing agents by charging large fines for noncompliance? This suggestion is so much easier than trying to create another tenure. This was attempted in 2003 with commonhold and it created so many unknowns that it ended up dwindling to nothing.
Communication is a key aspect that managing agents shouldn't shy away from as lack of it only results in unclear, "opaque" practices. In my organisation, we ensure our contact details (both phone and email) are available so that our customers can always get in contact with us directly so we can resolve any issues before they escalate. It would be disingenuous for us to say that we get everything right, in which case it's how we resolve issues that is important.
As ever, it's the worst-case scenarios that dominate the headlines but there's usually a bigger picture to see. In this case we need to recognise the managing agents that are following the Legislation and Lease terms, engaging in open and honest communication with customers and acting in an ethical manner - all of which makes Leasehold beneficial for customers.
It is time to consider a way forward to eviscerate the unethical practices of those who ruin it for the good agents and Landlords.
Lorraine Collis, chief executive, ELM Group (including Retirement Lease Housing Association)
