Fleecehold

[ProStreet]

Ahh yes, I see what you mean... trixy mo-fo's.
Unadopted by the council, though, and that's where the contention and mis-representation comes in...

It's a total con, and I feel a new law should be passed, as the management crap is in the deeds of the free-hold, so these people are technically on the hook and whim of some opaque company.

I mean some things do need to be written into deeds, for example, in my freehold, I'm not allowed to build a slaughter shed for pigs and/or chickens within 5 yards of the freeway, so that was a bummer!

But jokes aside, it's a clear abuse of process when you have financial entities stipulating things like we are talking about in this thread... when it's very clearly for profit/extortion.

Yep.

Difference between this and leasehold is that the company can't take your house away from you, as the freeholder can for a leasehold if you don't pay the ground rent (or fine you extortionate amounts for late payment). All that can happen I think is they can take you to court for not paying the service charge or send baliffs just like any other debt.

Other scam is shared ownership.
We really need to stop encouraging young people to sign into these agreements just to get on the housing ladder. Renting is far cheaper and provides a lot more financial security than leasehold or shared ownership. This country is a scam when it comes to property ownership.

 

[Nasher]

Never buy a new build, basically.

There is barely even any green spaces on these estates, not exactly much to maintain.

Is that legal?
I wonder how they would respond to a subject access request under the data protection act, or if you did sign an NDA, if it wall fall under 'unfair contract terms' legislation. https://assets.publishing.service.gov.uk/media/5a7c7f43ed915d48c241023b/oft311.pdf

A standard term is unfair 'if, contrary to the requirement of good faith, it
causes a significant imbalance in the parties' rights and obligations arising
under the contract, to the detriment of the consumer'– Regulation 5(1).

Just leak it anonymously. NDAs in this situation are pretty much worthless and unenforceable.

 

[Fiocca]

Yep.

Difference between this and leasehold is that the company can't take your house away from you, as the freeholder can for a leasehold if you don't pay the ground rent (or fine you extortionate amounts for late payment). All that can happen I think is they can take you to court for not paying the service charge or send baliffs just like any other debt.

Other scam is shared ownership.
We really need to stop encouraging young people to sign into these agreements just to get on the housing ladder. Renting is far cheaper and provides a lot more financial security than leasehold or shared ownership. This country is a scam when it comes to property ownership.

I'm in a shared ownership house. Bought my ex out after she left so on my own in a big 3 bed. The house has I think 84 or 85 years on the lease so it's close to the point of needing extension. Id happily downsize but I'm sort of stuck as the house is cheap to pay for with half mortgage plus rent, plus it faces my daughter's school, yet the flats on the open market in the area are expensive. So I don't really know what to do. Ideally I'd want to keep the house until my daughter goes to secondary in 3.5 years but the lease is really short.

I can't afford to extend the lease, another place half the size would cost me much more per month and it just sucks. I have one possible out which is at the time of sale I could maybe do a thing where you buy the whole house share and simultaneously complete the sale so the freehold transfers to me then to the new owners but it's not guaranteed I can do it.

 

[ProStreet]

I'm in a shared ownership house. Bought my ex out after she left so on my own in a big 3 bed. The house has I think 84 or 85 years on the lease so it's close to the point of needing extension. Id happily downsize but I'm sort of stuck as the house is cheap to pay for with half mortgage plus rent, plus it faces my daughter's school, yet the flats on the open market in the area are expensive. So I don't really know what to do. Ideally I'd want to keep the house until my daughter goes to secondary in 3.5 years but the lease is really short.

I can't afford to extend the lease, another place half the size would cost me much more per month and it just sucks. I have one possible out which is at the time of sale I could maybe do a thing where you buy the whole house share and simultaneously complete the sale so the freehold transfers to me then to the new owners but it's not guaranteed I can do it.

Hmm.

If you can do what you suggested then that sounds the way forward, at least then you'll get market value for the property. You don't want to leave it too much longer re the lease.

If you're happy to downsize, then that may be the best option for your finances going forward. Go for a freehold property next time and you'll have much more security.

 

[SeatIbiza]

I'm in a shared ownership house. Bought my ex out after she left so on my own in a big 3 bed. The house has I think 84 or 85 years on the lease so it's close to the point of needing extension. Id happily downsize but I'm sort of stuck as the house is cheap to pay for with half mortgage plus rent, plus it faces my daughter's school, yet the flats on the open market in the area are expensive. So I don't really know what to do. Ideally I'd want to keep the house until my daughter goes to secondary in 3.5 years but the lease is really short.

I can't afford to extend the lease, another place half the size would cost me much more per month and it just sucks. I have one possible out which is at the time of sale I could maybe do a thing where you buy the whole house share and simultaneously complete the sale so the freehold transfers to me then to the new owners but it's not guaranteed I can do it.

How did you get shared ownership with such a short lease?

You're approaching un-mortgageable territory plus under enfranchisement, the LL (freeholder) would be due marriage value which is a perceived uplift in the value of the property for extending. On the positive side you get 90 years added to the lease plus any ground rent is put to a peppercorn. When you say buy the whole house, I presume you mean off of the government. I'm not sure that would be possible without getting another mortgage (or extend your current one) prior to selling and then selling as a proper freehold...

 

[413x]

Can we do a petition to have Fleecehold be a legal term?

So when we browse Rightmove it will have filters, show freehold, leasehold, and fleecehold

Sorry. Already taken. Its a sexual position in Wales.

 

[Shoza]

I'm in a shared ownership house. Bought my ex out after she left so on my own in a big 3 bed. The house has I think 84 or 85 years on the lease so it's close to the point of needing extension. Id happily downsize but I'm sort of stuck as the house is cheap to pay for with half mortgage plus rent, plus it faces my daughter's school, yet the flats on the open market in the area are expensive. So I don't really know what to do. Ideally I'd want to keep the house until my daughter goes to secondary in 3.5 years but the lease is really short.

I can't afford to extend the lease, another place half the size would cost me much more per month and it just sucks. I have one possible out which is at the time of sale I could maybe do a thing where you buy the whole house share and simultaneously complete the sale so the freehold transfers to me then to the new owners but it's not guaranteed I can do it.

Wait until the Government passes the Leasehold reform act as it will greatly benefit shared owners extending their leases.

Hopefully be in this year or next.

 

[FISHGUTS]

As a small developer I'll give the other side of view.

I have to set up a management company & put all communal areas in as the council will not adopt or maintain them.
To satisfy planning conditions before first sale, a maintenance plan must be provided & approved by the local council. To do this you must agree to put a maintenance provider in place.
I cover all maintenance until the site is finished. All communal areas are then owned by the residents, who see to the management company & after the initial contract can mainatin the area as they wish.
It has to be maintained by a professional company at the behest of the local council & approved management plan. A council wants to make sure an estate is properly maintained & they have a company to point a finger at if it's not. Likewise buyers solicitors want to see the same.


Surface water generally has to be put into said management companies as no surface water can leave the site. Utility companies can adopt surface water infrastructure, but generally make it that onerous to be impossible. Why would they want the cost of maintaining future infrastructure, when they can charge the same water bills & get new build estates to pay for it?

 

[swillsy]

As a small developer I'll give the other side of view.

I have to set up a management company & put all communal areas in as the council will not adopt or maintain them.
To satisfy planning conditions before first sale, a maintenance plan must be provided & approved by the local council. To do this you must agree to put a maintenance provider in place.
I cover all maintenance until the site is finished. All communal areas are then owned by the residents, who see to the management company & after the initial contract can mainatin the area as they wish.
It has to be maintained by a professional company at the behest of the local council & approved management plan. A council wants to make sure an estate is properly maintained & they have a company to point a finger at if it's not. Likewise buyers solicitors want to see the same.


Surface water generally has to be put into said management companies as no surface water can leave the site. Utility companies can adopt surface water infrastructure, but generally make it that onerous to be impossible. Why would they want the cost of maintaining future infrastructure, when they can charge the same water bills & get new build estates to pay for it?

The idea of the mangment companies isn't really the issue as they are needed to do as you said. The problem is there is no regulation so there's no rules or incentive to get them to have any cost control etc which they should look at.

 

[jpaul]

Surface water generally has to be put into said management companies as no surface water can leave the site. Utility companies can adopt surface water infrastructure, but generally make it that onerous to be impossible. Why would they want the cost of maintaining future infrastructure, when they can charge the same water bills & get new build estates to pay for it?

maybe there should be equivalent of a rateable value for property sewerage/surface-water processing, so the national utlities do differentiate properties.

e:

The problem is there is no regulation so there's no rules or incentive to get them to have any cost control etc which they should look at.

perhaps unique to smaller estates , but we do have a voice on cost control

 

[Fiocca]

How did you get shared ownership with such a short lease?

You're approaching un-mortgageable territory plus under enfranchisement, the LL (freeholder) would be due marriage value which is a perceived uplift in the value of the property for extending. On the positive side you get 90 years added to the lease plus any ground rent is put to a peppercorn. When you say buy the whole house, I presume you mean off of the government. I'm not sure that would be possible without getting another mortgage (or extend your current one) prior to selling and then selling as a proper freehold...

The lease was only 99 years when it was built. Was 92 when I bought it. Tbh I didn't know about the pitfalls of leasehold and it was the only way my ex and I could get on the ladder. And yes, I know all about the marriage value etc now, a bit too late mind.

The whole thing is a scam. What really baffles me is the housing association owns the other half so any sale makes them money. Surely if the lease running low creates a loss in value for them, why can't they just grant a lease extension? Obviously there's some ridiculous laws involved somewhere but it's a joke. I could sell it in the very near future I guess but again, I'd have to find somewhere I can afford in this area which isn't easy for a single dad.

 

[DB_SamX]

As a small developer I'll give the other side of view.

I have to set up a management company & put all communal areas in as the council will not adopt or maintain them.
To satisfy planning conditions before first sale, a maintenance plan must be provided & approved by the local council. To do this you must agree to put a maintenance provider in place.
I cover all maintenance until the site is finished. All communal areas are then owned by the residents, who see to the management company & after the initial contract can mainatin the area as they wish.
It has to be maintained by a professional company at the behest of the local council & approved management plan. A council wants to make sure an estate is properly maintained & they have a company to point a finger at if it's not. Likewise buyers solicitors want to see the same.


Surface water generally has to be put into said management companies as no surface water can leave the site. Utility companies can adopt surface water infrastructure, but generally make it that onerous to be impossible. Why would they want the cost of maintaining future infrastructure, when they can charge the same water bills & get new build estates to pay for it?

I appreciate the input from the other side, and i agree everything you mention needs paying for, but I've never managed to get a justification of costs from my managing company to see if they're legirimate, in which case I'd leave them alone. But as others have said, lack of clarity leads to doubt on any motivation on their side to get value for money e.g. in my case, the breakdown/justification for £100ph cleaning cost.

 

[SuperElectric]

Wow, this thread is concerning. What's the best way to find out if a freehold house for sale has a service charge or is adopted from the council?

 

[HungryHippos]

Wow, this thread is concerning. What's the best way to find out if a freehold house for sale has a service charge or is adopted from the council?

Ask the estate agent. If it's on a relatively recent new build estate there is a high chance it will have one as well to be fair.

Smaller developers who are just doing a small batch of say 2-3 houses may not have them.

 

[FISHGUTS]

I appreciate the input from the other side, and i agree everything you mention needs paying for, but I've never managed to get a justification of costs from my managing company to see if they're legirimate, in which case I'd leave them alone. But as others have said, lack of clarity leads to doubt on any motivation on their side to get value for money e.g. in my case, the breakdown/justification for £100ph cleaning cost.

Do you not have the option of changing management companies?

 

[ci_newman]

Do you not have the option of changing management companies?

Only if they are freeholders, leaseholders don't have that choice.

 

[mejinks]

Leasehold feels like the UK version of the US's HOAs

I was just thinking that

 

[Richie]

Leasehold feels like the UK version of the US's HOAs

Not so much Leasehold but Factored estates are like HOAs

Leasehold - you own the home but not the ground its built on
Factored - you pay a maintenance charge to maintain the common areas of the estate.

You can have 1 and not the other (leasehold on non-factored estate or freehold on factored estate) or both (leasehold property on a factored estate) but they are slightly different.

Some factored estates can determine which factor they use to maintain the estate. They generally need to form a Residents Association (like a US style HOA) where they can then vote on things for the estate itself including assigning factors for maintenance.

 

[dowie]

Only if they are freeholders, leaseholders don't have that choice.

That's not true, there is a right to manage in the UK. I'm a leaseholder and I have shares in the management company for my block and for the wider amenity company.

Essentially the "management company" is just an entity owned by the leaseholders in order to self manage and an external management company is appointed as the managing agent for each block and for the site as a whole, these can certainly be changed (and one block did do that for a few years) but generally it's more efficient to have the same company appointed as agents for everything.

By having a resident-owned management company every leaseholder is a shareholder and can attend and vote at the AGM, resident directors are appointed and they oversee spending decisions during the year.

Lots of things can't really be changed too much - you're going to have an annual charge for the management company(agency) for providing a full-time property manager (works off-site) and a finance department to collect/chase service charges, and concierge + caretaker on site etc. you can shop around but it's only a portion of the service charge. Big stuff like buildings insurance is third party and the directors will want to shop around/get quotes, ditto to any maintenance projects, upgrades to the site etc..

It becomes apparent that there are obvious savings - something mandatory like fire inspections of flat doors, the management company(agency) might say "yeah we have staff that can do that for £XXXX" and if they weren't acting as agents for the residents a freeholder would probably just say yes as they're not paying but resident directors can say "hang on" and get some quotes and find out they were about to charge double the cost of a third party.

There are also some conflicts of interest - the water bill for example - BTL landlord leaseholders say want to get rid of the communal block bill and have meters installed, obvs the cost is then passed on to their tenants, but other leaseholders don't really have that incentive and tell them to jog on. Lifts are another issue, some blocks will have "cores" - (i.e. parts of the block sharing a front door) that don't have a lift and cores that do have a lift, lift maintenance is a pain in the ass and adds a bit to the service charge, in some blocks residents in cores without lifts will have a reduced service charge but in others, they might not take it into account so everyone in that block pays for a lift they don't necessarily have access to.

 

[SeatIbiza]

The lease was only 99 years when it was built. Was 92 when I bought it. Tbh I didn't know about the pitfalls of leasehold and it was the only way my ex and I could get on the ladder. And yes, I know all about the marriage value etc now, a bit too late mind.

The whole thing is a scam. What really baffles me is the housing association owns the other half so any sale makes them money. Surely if the lease running low creates a loss in value for them, why can't they just grant a lease extension? Obviously there's some ridiculous laws involved somewhere but it's a joke. I could sell it in the very near future I guess but again, I'd have to find somewhere I can afford in this area which isn't easy for a single dad.

I didn't realise shared ownership was a thing back then. But I suppose 1992 was after the mega recession!

Have you asked them for a quote to extend the lease? Or buy the FH? Don't ask, don't get and all that. Whilst it is a bit of a calculation, it is more of an art than a science. Yes you can value an income (the ground rent) quite accurately, but the rest of it is theoretical based on comparables etc. so certainly more of an art - the job of the surveyors involved. I did one years ago for my dad with Peveral being the FH (utter utter you know whats) and I got a reasonable result in the end paying £5k all in (they wanted £15k but messed up and didn't respond to my notice). As they are "in bed" with you, they might treat you differently?