Barbican Association
Golden Lane Estate Residents’ Association
Middlesex Street Estate Residents’ Association
Petticoat Square Leaseholders’ Association
14 April 2023
Dear Ms Fredericks
We write on behalf of the City’s Recognised Tenant Associations with some concerns and comments on the report entitled “Duration of Right to Buy Leases (HRA)”, due to be considered and voted on by your committee on Monday April 17. I have cc’d Liam Gillespie here as the report’s author, but please circulate this to members and officers of the Corporation as you see fit.
The report contains an interesting recommendation for the CoL to provide leases of 125 years-duration for any new right to buy purchases. We welcome this proposal as an attractive offer to the current social tenants who may wish to buy the leasehold of their properties, and as a fitting response to the concerns highlighted in the report.
However, the report also states that: “any policy change would not affect leases already granted” and that “current leases will be unaffected”, despite the same issues around obtaining mortgages etc, affecting existing leaseholders on City estates and potential buyers on the open market.
As representatives of the City’s residents and leaseholder associations we strongly request some amendments are made to clarify and make consistent the Corporation’s policy on this matter and avoid serious and unfair implications to existing leaseholders.
We consider it grossly unfair and unreasonable to propose extending new leases to 125 years if this does not apply retrospectively to existing leaseholders who have already exercised their right to buy (or who have since taken over those leases), and/or to any new purchases on the secondary market.
As presented, the current recommendation would create a double standard of long leases across the City, contrasting new lease purchases under right to buy with purchases on the secondary market of existing leasehold properties with much shorter (and declining) terms.
The appendix to the report shows the duration of existing long leases granted for each block, dated from the first purchases made under right to buy in the 1980s. You will note these vary between 84 to 100 years remaining.
The report notes that “many” existing leaseholders have already extended individual leases under the formal terms of the Leasehold Reform, Housing and Urban Development Act 1993. This gave long
leaseholders of two or more years’ standing the right to extend their lease by a minimum of 90 years – but at their own expense, paying a premium of many thousands of pounds, including covering the City Corporation’s administrative and valuation costs.
However, section 16 of the report also discloses that a slightly different policy already applies to open market sales at the Barbican, where leases may be extended at the point of purchase (or “completion”).
The 1993 legislation also allows for lease extensions to be granted on an “informal” basis, which we assume is the basis for the Corporation’s current recommendation and for policy at the Barbican.
If the recommendation as presented is passed, it will further increase the variance in duration of “old” and “new” leases across the City’s Estates, with significant impacts on the local property market and leasehold valuations. The result will not just be widening disparities in the duration (and therefore value) of leases but confusion for existing leaseholders who are awaiting forthcoming statutory legislation in this year’s King’s Speech regarding lease extensions.
We recommend that the Committee and Corporation consider these impacts on existing leaseholders and request strong amendments or revisions to the proposed report. If necessary, we suggest that the committee postpone a decision until the matter can be more thoroughly and consistently presented to members.
Yours faithfully,
David Rose – Chair, Petticoat Square Leaseholders’ Association
Tim Godsmark – Chair, GLERA
Adam Hogg – Chair, Barbican Association
Roger Way – Chair, Middlesex Street Estate Residents’ Association
