Multi-owned housing Flashcards
(30 cards)
1
Q
What is a leasehold estate?
recap
A
- exclusive possession for a term
- residential context
2
Q
What are the options for the length of term for leasehold estates?
recap
A
- short (fixed or periodic)
- long (21 years)
- very long (99; 125; 999 years)
- no perpetually renewable leases (s.145 + sch 15 LPA 1922) -> 2000-year lease
- No lease for life -> 90-year term (s.149(6) LPA 1925)
3
Q
what does multi-owned housing mean? (5)
A
- umbrella term referring to various solutions
-> low-rise and mid-rise apartment blocks
-> high rise buildings (tall towers)
-> housing cooperatives [especially relevant in public & social housing]
-> co-housing developments
-> community land trusts
last 2 are not wide-spreaad
4
Q
Common features of multi-owned housing
A
- individual flats located in a single, multi-storey building
- common spaces and shared facilities to be used in common
-> essential facilities e.g. roof, walls, staircases
-> other amenities e.g. gym, garden - you own individual flats and share common facilities
- Flat owners pay for maintenance and repair of shared facilities
- collective decision-making + need for a managing agent/professional
5
Q
2 key features of multi-owned housing
+ quotes
A
- sharing is at the core
-> both the physical layout and the governance framework of multi-owned housiing require some form of sharing by the homeowners (Blandy) - impact on ownership rights
-> condominium facilitates a spatial reconfiguration of property interests and their owners […] this spatial embedding produces a dramatically different context in which ownership operates - Harris
6
Q
Types of legal framework for multi-owned housing (2)
A
- Condominium title
- Long lease of flats
7
Q
Where is condominium used as a framework?
A
- US
- Australia
- South Africa
- France
- Italy
8
Q
What is used in England and Wales as a framework?
A
long lease of flats
9
Q
2 common characteristics of condominium title
A
- product of statutory law
- ‘dualistic’ ownership distribution
10
Q
Product of statutory law?
condominium title
A
- around 1950s
- prescriptive rules
- little autonomy for owners
- Parliament in all countries w/ this framework have intervened
-> to regulate legal framework for buildings
-> to strike appropriate balance between individual ownership of flats and rights over common facilities
11
Q
Dualistic ownership
condominium title
A
- individual ownership of flats
- collective owernship of common parts / shared facilities
- Sherry: “there are two layers of ownership”
- Owners responsible for management / upkeep of building -> usually via owners corporation
- owners are often collectively responsible for shared areas
12
Q
What are the 2 roles?
Long Leasehold system
A
- freeholder
- leaseholders
13
Q
What does the freeholder do?
Who is he?
Long Leasehold system
A
- landlord
- individual or incorporated body
- owns building, including common parts -> owns title of building
- responsible for management / upkeep of building
- does not occupy the property but has investment / management interest -> especially if it’s a business
14
Q
Who is the leaseholder?
What do they do?
Long Leasehold system
A
- long leases of flats (99, 999 years) for a premium + low ground rent
- the premium will be very high; can be similar to what you would pay to buy a fee simple
- ground rent can be peppercorn rent (symbolic)
- This is the title to the unit of the flat that the leaseholder buys from the freeholder
- Pay costs of management to landlord via service charge
- occupy building, can sub-lease, assign their lease etc.
15
Q
Who benefits from the lease?
Long leasehold system
A
- leaseholder: has a valuable investment, with lease being so long, it will become very valuable
-> freeholder then gains signficant capital
16
Q
Where does power rest?
Long leasehold system
A
- with the freeholder
- leaseholders are not involved in the upkeep of the building
- freeholder is the one making the decisions
- doesn’t usually consult the leaseholders
- imposes decisions on them - leaseholders have to pay even if they don’t agree
17
Q
How does a freeholder feel about a 999 years lease?
Long leasehold system
A
- little value
-> no foreseeable right to repossess at the end of term (apart from forfeiture for breach)
-> low ground rent received, unless doubling - BUT
-> substantial premium received
-> management fees are taken on by leaseholders
18
Q
How does a freeholder feel about a 99 years lease?
Long leasehold system
A
- Greater value
-> value grows as the term declines
-> full freehold interest at the end of term -> new lease
-> low ground rent received & substantial premium received (though commensurate to length)
-> management fees covered by leaseholders
-> within 2-3 generations property will revert back to freeholder, who can grant lease to another person and get money again
19
Q
How does a leaseholder feel about a 999 years lease?
Long leasehold system
A
- Very high value
-> lease can be assigned, sub-leased, mortgaged - BUT
-> doubling ground rent very problematic
-> high service charge to pay + insurance + permission fees
20
Q
How does a leaseholder feel about a 99 years lease?
Long leasehold system
A
- High value
- BUT ‘wasting asset problem’
-> lease can be assigned
-> value decreases with time
-> problems with lenders
-> below 8 years unmortgageable / unmarketable - AND
-> doubling ground rent / high service charge + insurance + permission fees
21
Q
For flat ownership - where it’s a company
Long leasehold system
A
Freeholder:
- company in which all leaseholders own a share
- company (so leaseholders collectively) take decisions on management
Leaseholders:
- long leaess of flats granted by the company
- they are their own landlord
Only a minority of cases
22
Q
dimensions
Why is long leasehold used instead of freehold for flat ownership?
A
- Land is multi-dimensional -> 3 dimensions + time
- s.205(1)(ix) LPA 1925 says ‘buildings or part of buildings’ and that it doesn’t matter what the divide is like
- Gray & Gray -> 2 dimensional plot of land would have little meaning and even less utility
23
Q
What is flying freehold?
A
- title to land to be stratified horizontally
- can be vested in various owners simultaneously
24
Q
Does English law admit flying freehold?
What else does it use?
A
- reluctant to
- leasehold used instead
1. physical interdependence of flats -> vulnerability on a practical level (if flat above is damaged, flat below will be impacted - dangerous)
2. impossibility of positive freehold covenants to bind successors in title
25
What is a problem with running of positive freehold covenants?
Clarke:
- the freeholders would have to support the flats above and below themselves as well as their own
- this mutual enforceability is prevented by common law -> burden of a freehold covenant doesn't run with the land
- you can't force a subsequent owner to pay by virtue of title alone
26
Statutory interventions
academic
statute
Law commission
3 examples of interventions
## Footnote
Long leasehold of flats
- Clarke: piecemeal and usually a response to particular needs or abuses as they arise, rather than principled or even a comprehensive code
- CLRA 2002 (Commonhold and Leasehold Reform Act 2002) - introduced commonhold as new form of shared ownership of flats
- Law commission has made recent proposals to reform leasehold
1. enfranchisement rights
2. right to manage
3. abolition of ground rent
27
Enfranchisement rights
- what is it?
## Footnote
Long leasehold of flats
- the closer the lease comes to end of its term, less value it has -> can be overcome by extending lease or buying fee simple
- Leasehold Reform Act 1967 didn't apply to leases of flats
- Leasehold Reform Housing and Urban Development Act 1993 -> as modified by CLRA 2002 -> applies to long leases of flats
-> right of collective enfranchisement (right to buy freehold at favourable price)
-> right to extend lease (right to obtain new lease for unexpired term + 90 years at premium + peppercorn rent)
28
Collective enfranchisement
## Footnote
enfranchisement rights - long leasehold of flats
qualifying leaseholders:
- if long lease of more than 21 years
- s.3(1) 1993 Act -> building contains 2 or more flats
- s.3(1) 1993 Act -> total number of flats held by qualifying leaseholder is no less than 2/3
- s.13(2)(b) 1993 Act -> notice of enfranchisement process must be given by qualifying leaseholders no less than 1/2 total number of flats
- mixed use buildings need residential part to be more than 25%
- process conducted by Right to Enfranchise Company on behalf of leaseholders + company will manage building after enfranchisement
- s.23(1) and (2) 1993 Act -> freeholder can give counter-notice to prevent enfranchisement if intends to redevelop whole / substantial part of premises (if no less than 2/3 leases terminate within 5 years)
29
Statutory measures regarding management
2 key measures
What do they do?
## Footnote
right to manage - long leasehold of flats
1. Right to Manage (RTM) -> introduced by CLRA 2002
2. Regulation of service charges -> Landlord and Tenant Act 1985
- tackle the imbalance of powers between freeholder/leaseholders in relation to the management of blocks of flats
- overall cut down the ability of freeholder to profit from / control management rights in the property
30
Right to manage (RTM)
## Footnote
right to manage - long leasehold of flats
