A new lease of life: - CentreForum

A New Lease of Lifebeneficial developments. If a leaseholder is going to increase thevalue of a property, the freeholder will benefit when the lease isextended or enfranchised. This is a more than sufficient benefitconsidering that the freeholder has not spent anything. It isunacceptable that a freeholder should receive a significant doublebenefit by also charging for consent for beneficial work, particularlywhere individuals have leases longer than 80 years and hold thevast majority of the financial interest in the property.Freeholder ‘grazers’ – who seek relatively minor opportunisticprofits from a large number of properties - have emerged, aiming tobenefit from charges for development consent. This phenomenonhas been particularly prevalent in northern England, where largeswathes of freeholds have been bought at auction for relatively lowprices. 80 Some may argue that ground rent alone delivers sufficientreturn on the freehold investment but, in reality, most rents are toolow to deliver competitive rewards. This, combined with the way thatmany ‘grazer’ freeholders use connected management companiesand put significant emphasis on charges for development consent,suggests that this is a direct aspect of their business model.Estate Management Schemes: control over freeholdproperty developmentThere are also cases where an erstwhile freeholder can retain controlover properties, even after former leaseholders have enfranchised.This occurs in the presence of Estate Management Schemes, whichwere created by legislation in 1967 (and extended in 1993) to bolsterusual planning laws to ensure that the character of specified areasmay be protected. Powers of EMSs can include: 81::Regulation of redevelopment, use or appearance ofproperties;::Ability to conduct works of maintenance, repair, renewal orreplacement on properties within the scheme;::Empowerment to charge residents for these associatedcosts;::Authorisation to inspect properties.80 Barry Gardner MP: “ground rent grazers that have bought up literally hundreds ofthousands of freehold interests, usually at auction in the north-west of England”.See www.publications.parliament.uk/pa/cm199798/cmhansrd/vo980610/debtext/80610-04.htm.81 Leasehold Reform, Housing and Urban Development Act 1993, Chapter 5.46