On the south west border of Kidbrooke lies the Courtlands Estate, a few hundred maisonettes built on sports fields at the tail-end of the 1950s. It’s a pretty quiet kind of place, its tree-lined roads insulated from the noisier, busier, roads that race past to the south and east:
Most issues on the estate are fairly predictable - a little low-level crime, a bit of fly-tipping and an excess of wheelie bins – but in recent years a growing number of residents have been hit by massive and unexpected bills to extend their leases.
In response, last year a group of residents came together and formed the ‘Mosquito Group’ to help educate other residents of their rights, and to try to push back against the increasing costs of lease extensions.
The cost of extensions has gone up partly because freeholders - who leaseholders must pay to extend their lease - have won a number of legal cases about how the price is calculated. But if leaseholders choose not to extend, or cannot afford to, they risk being stuck in a property rapidly shrinking in value, or face having to pay a far higher price to extend the lease at a later date.
Costs rise more rapidly when a lease is less than 80 years, because then the leaseholder has to pay a share of the “marriage value”, a form of compensation to the freeholder.
On the Courtlands Estate the original leases were of 99 years, meaning many properties today have leases of just 49 or 50 years. As the lease gets shorter, so the cost of extending it rises. Today, the cost of extending a lease on the Courtlands is around £25,000; 10 years ago it may have been half that figure.
Spurred on by the Mosquito Group, many Courtlands residents are now in the process of extending their leases. By acting together, using the same valuers and solicitors, and sharing information and expertise, they have successfully presented a united front to the freeholder’s agents, who they must negotiate with.
But not everyone has tens of thousands of pounds to extend their lease. Many residents - some of whom have lived on her estate since it was built 50 years ago - are at risk of being stuck in an unsellable property. The price of an extension will continue to rise as leases get shorter, and so the value of the properties with a short lease will continue to decline. Local estate agents say flats on the estate have been changing hands at around £190,000 with leases of 90 years or more, but at less than £140,000 with the 50-year leases many now have.
Part of the reason for this difference is that mortgage lenders are very reluctant to extend good terms to properties with short leases, and will usually limit the amount that can be borrowed, and restrict mortgages to interest-only rather than capital repayment.
Further hurdles remain. Leaseholders that can afford to extend their lease can find themselves at the mercy of freeholders, who have a strong interest in throwing up obstacles, to delay the process, and so push up the price of the lease extension. Freeholders can also try to profit from overcharging for legal and valuation fees, which leaseholders must pay.
One leaseholder on the Courtlands Estate took more than two years to agree a price for her extension, but she had to pay the freeholders’ agents thousands of pounds in fees on top of the £26,000 cost of the extension. She was particularly angered by having to pay the agents for the same survey to be conducted twice - at a cost of more than £1,000, as well as £400 ‘travel fees’ to south-east London from Chelsea.
Such behaviour comes as little surprise to Nigel Wilkins, who runs campaign group, CARL, pushing for reform of the leasehold system. Wilkins says that leaseholders can appeal to a tribunal, but the odds are often stacked in favour of the freeholder. He adds:
“Anyone wanting to sell in a reasonable time would not be able to go through the tribunal procedure, which is costly anyway. They are therefore thrown at the mercy of the landlord, and end up paying far more.”
If anyone on the Courtlands Estate wishes to contact the Mosquito Group for more information about lease extensions, please contact this blog and we’ll pass on the details.
Tom is a journalist who's lived in south-east London for most of the last decade.