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Leaseholders Overcharged?

Many landlords are freeholders of their buy-to-let investments. The idea of being a tenant but also a landlord is a bit of a paradox. For over 3 million leaseholders in the UK including many landlords it’s a daily reality.

A leasehold interest is one which is subservient to that of the freeholder and the whole system governing the law and legal relationship between freeholder and leaseholder has evolved over thousands of years.

The highest concentration by far of leaseholders exist in London where over half a million property owners do not own their freehold. A recent report by the London Planning and Housing Committee highlights some of the issues affecting leaseholders in the capital but these issues are just as relevant to the leaseholders in the rest of the UK.


Report on Leaseholds ‘Highly Charged’

A recent report by Steve O’Connell on behalf of the Assembly’s Planning and Housing Committee, lifts the lid on some of the problems with the current system when it comes to dispute resolution between the freeholder and leaseholder, including how works to the property are procured and charged for.

We have drawn landlords attention in the past some of the issues with freehold landlords over charging their leaseholders on the service charge.
One of the issues that Property Hawk highlighted was where freehold landlords over charge on the building insurance on a block of investment properties.

The report draws on evidence from London leaseholders. Many of the leaseholders highlighted problems with the dispute resolution process itself, the lack of transparency when it comes to the charges and finally how building works are organised and then charged for.

The main recommendations from the report were as follows:

• Private landlords and managing agents must make contract procurement and bills more transparent, with key stakeholders like ARMA and RICS setting an example of good practice.
• Companies that promote their services as 100 per cent transparent seem to be boosting confidence in the way leaseholders can access all the information they need to know about how their services are procured and charged for. These best practice principles should be adopted across the sector.
• Private sector landlords should learn from their public sector counterparts as they tend to have more comprehensive consultation processes.
• The Leasehold Valuation Tribunal (LVT) is asked to review their processes to rule out any unfairness associated with leaseholders conducting their own cases.
• The LVT, in conjunction with LEASE, should set out plans for providing an expanded service offering mediation, pre-application advice and assistance as a cost effective method of improving the dispute resolution process.
• The Government should look at making mediation a compulsory first step of the dispute resolution process to help leaseholders avoid potentially costly court cases altogether.
• Conveyancing solicitors should provide leaseholders with more information up front, the way public sector landlords like local authorities have to.

To view the full report download it from the Greater London Authority website.

For more leaseholder advice

Have you had a problem with your freeholder, feel free to post about your experiences below or any relevant questions in our landlord legal forum

We do recommend the Leasehold Advisory Service (LEASE) for some excellent free advice.

If you are looking to extend your lease why not make use of our leasehold extension service.

For specific questions on a leaseholder question please post a question in the landlord legal forum.

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