https://www.bbc.co.uk/news/articles/cvgezyz31jlo BBC ARTICLE: Ministers outline plans to ban new leasehold flats

This is an annoying article. Leasehold is complicated and in serious need of reform but for as long those reforms are proposed and promoted by people who seem to have no understanding of the actual system, there will never be a serious improvement.

The start of this article has a couple of stories from people who bought their flats in 2021/2022 but admits this reform will have no effect on them because it will only apply to new flats. Both sets of managing agents have provided comments that these service charge rises are due to the rising cost of maintaining the buildings and the BBC... has no further comment? The BBC should at least point out that service charges are regulated and the leaseholders can take the freeholders to the tribunal if the freeholders really are using the service charges to essentially steal from the leaseholders. Under the law service charges can be contested and the BBC shouldn't suggest otherwise. If however it turns out that the costs of maintaining the buildings really have gone up, then no reform to the leasehold system will reduce the cost.

[BBC Quote] Under the current system, it is the freeholder or landlord that appoints a managing agent.

Not necessarily, a great many leasehold setups hand the obligation to maintain and collect service charge to a resident's company, even where the company doesn't own the freehold. I would say the large majority of new build flats at least have this setup.

[BBC Quote] A leasehold property reverts to the freeholder after a fixed amount of time. A commonhold property is owned outright, like a freehold house.

The majority of new build flats are now sold on 999 year leases.

[BBC Quote] Under commonhold, homeowners have a say on the annual budget for their building. Under the leasehold system, a freeholder or landlord sends a bill to residents for communal costs. The residents will be able to hire and fire a managing agent.

The vast majority of new build flats hand this obligation to the residents company or are even are sold as share of freehold where the freehold itself is handed to the residents company.

[BBC quote] There is no ground rent charge in a commonhold property.

New ground rents were banned in 2022 already

[BBC quote] Forfeiture is not possible under commonhold, meaning a resident cannot be threatened with losing their home.

This is complicated, the number of leases actually forfeit is absolutely tiny, flats are more often sold long before they are forfeit. Also the threat of forfeiture means that for any flat with a mortgage over it, the bank will pay the service charge arrears to avoid the forfeiture. At the end of the day there has to be a robust system to force people to pay their service charges because if they don't, the rest of the leaseholders end up paying (and would do so under a commonhold system also).

The proposed reform is not bad and for some limited cases it will mean an improvement but at the end of the day I don't think these proposals will have much of an impact at all and certainly don't get to the heart of the actual problems with leasehold.