Why is this important?
We know that many people get shocked by leasehold scandal and it affected over 100 000 leaseholders, so it is very important to understand how it was possible that freeholders can cheat without confrontation with Law.
The Leasehold Reform Act 1967
This Act had many drawbacks back then, it couldn’t stop leasehold abuses. It gave freeholders a lot of freedom to manipulate with prices. This act was so unfavorable for leaseholders. Freeholders could include formula for calculating the price of getting the freehold, and leasehold was the one who should have find and pay for expert valuer to calculate the cost. Leaseholders were forced to pay other legal fees as well. Beside specialist valuer they had to employ and pay for their own solicitor. Also this act said that once your contract expires, you have right to either renew contract, or to buy freehold. It was better option to buy freehold, because the price would have rise rapidly.
Landlord & Tenant Act 1987
This act established option for flat owners to buy freehold for their building. Of course this was used by billionaires while ordinary people couldn’t afford this. We shouldn’t forget that leaseholders of flats also have problems because of leasehold scandal.
Leasehold Reform Housing & Urban Development Act 1993
This Act gave option to the leaseholders to extend their lease for another 90 years. Not only that, but their ground rent was almost equal to zero. This was significant improvement in legislation of leasehold houses. It wasn’t accepted quite well in all parts of government, but leaseholders liked it. But here lies part of leasehold scandal problem. There wasn’t good enough compensation for freeholders, who were complaining about this act.