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THE LORDS DEBATE ON LEASEHOLD ENFRANCHISEMENT

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Environment Minister Lord Strathclyde today set out the opportunities for people to own and control their homes und...
Environment Minister Lord Strathclyde today set out the opportunities for people to own and control their homes under the proposed leasehold enfranchisement legislation.

'This Bill is one more stage in the government's commitment to encourage owner occupation and to enable people to take full advantage of their own property,' Lord Strathclyde told the Lords during the Housing and Urban Development Bill's second reading.

Lord Strathclyde outlined the principal needs for leasehold legislation: 'People who buy long leases at low rent are generally thought of as owner occupiers, even though they are tenants in the eyes of the law. This contradiction produces two distinct problems for the leaseholder.

'The first is that a lease is a wasting asset. A new long lease is equivalent in price to a freehold, but its values declines inexorably as its term expires. This makes a lease increasingly difficult to mortgage as building societies will usually only lend on an unexpired lease of at least twice the mortgage term. This problem is now becoming acute as many long leaseholders of flats date from the new owner occupiers of the 1950s.

'The second problem is that because a leaseholder remains legally a tenant, control remains with the freeholder. This is a particular problem with tenants where the communal nature of repair, maintenance, and insurance gives control of the block to the freeholder yet all the costs fall to the leaseholders.

'Research by the Consumers Association found that two thirds of leaseholders reported problems with their freeholders. nearly half of these problems were considered serious by the Association. Typical problems identified included overcharging for services, misuse of funds, suspected non payment of insurance and harassment. The government wants to encourage a fundamental restructuring of housing tenure in England and Wales to address these problems.'

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