How England’s flats turned into second-class housing
Leaseholds and cladding crisis help explain the stagnation in apartment prices
JOHN BURN-MURDOCH Financial Times 18th May 2023
https://www.ft.com/content/df25ccc7-5dcf-446e-8a07-332ad5612f09
If Zoom, Peloton and pet shops were some of the unexpected winners of the early phase of the global pandemic, one of the biggest losers was apartment living. From March 2020 onwards, trends in house and flat prices diverged dramatically as lockdowns and remote working put a premium on domestic space. So ubiquitous was this sudden sense of mild claustrophobia that it can be hard to remember that, until lockdowns struck, apartments and houses had enjoyed equal status almost everywhere. Their prices had previously moved in virtual lockstep as they climbed steadily upwards through the early 2000s, crashed in 2008, and then resumed their ascent over the decade since.
I say almost everywhere because there are two glaring exceptions: England and Wales. Whether you look across the Atlantic, over the Irish Sea or north of the border with Scotland, flats held their own with houses in the years leading up to the pandemic. But in England and Wales, flat prices rose just 0.6 per cent between January 2017 and March 2020, while house prices climbed more than 5 per cent. The stark contrast with the other UK nations is especially significant, because it helps identify the culprits. Broad economic conditions were similar over this period, and the only significant regulatory change affecting the housing market — an additional 3 per cent stamp duty rate in 2016 for people buying additional dwellings — was UK-wide, and so cannot explain a divergence that happened in only two of the four nations. Instead, the statistical smoking gun points to two prime suspects. First, England and Wales’s deeply dysfunctional leaseholding system, which applies to 95 per cent of owner-occupied flats but just 8 per cent of houses. And second, the cladding crisis triggered by the Grenfell Tower fire.
Despite paying hundreds of thousands of pounds to become “homeowners”, leaseholders in England and Wales do not fully own their property, are subject to arbitrarily determined service charges whose increases sometimes far exceed inflation, and can spend years tied up in disputes with the property owner over building repairs and maintenance full article
What is the solution to this predicament
of rising interests, rising service costs ,
flattened profits and negative equity that
we may be in ?
Is it bite the bullet and ride it out ?
Will the recovery be in my lifetime of another 10 years?
There must be a fair solution ?
Who looks after the leaseholder fair deal?
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Hi Geeta
With regard to the service charge most of that increase is due to incompetent retendering off the electricity supply by Rendall and Rittner, in my opinion. This should be challenged at tribunal. Hopefully electricity costs will have come down anyway within the next six months or so but it’s not guaranteed and it’s also about getting a good deal as well as the actual prevailing market rate.
Right to manage should help as well – and after two and a half wasted years and an immense amount of pressure from me and other residents, it looks like the process is Finally Moving. Sadly CBWRA do not think it is worth Consulting residents about which firm to choose and it looks like they’re heading in the wrong direction. If the culture of not consulting residents and making decisions in secret continues then Right to manage will make no difference.
It seems the current co-chairs are very much continuing the dysfunctional culture created by the former chair, which is very disappointing but not unexpected.
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