Who owns the flats then? A lease of 99 years with rent I would assume easily covers the outright cost of the flat. Seems crazy to me that this system continues to function.
The building owner (freeholder), who is normally also the superior landlord.
> A lease of 99 years with rent I would assume easily covers the outright cost of the flat.
You pay annual ground rent, UK law means that this is pretty much capped to £250 per year outside of London, and £1000 per year in London. Most ground rents are below that (£30-£100 per year outside London, £200-£500 inside London).
So for most leases the ground rent over the lease period doesn’t even come close to the premium (the amount paid the purchase the lease, or what most people would call the cost of the flat).
If you do a statutory lease extension (which costs money), then the lease is extended to 999 years, and the ground rent drops to a peppercorn (another bit of crazy English law https://en.m.wikipedia.org/wiki/Peppercorn_(legal) ).
There are some projects of laws to remediate this mess, but this requires to overwrite private contracts, something gvts have been reluctant to do so far.
You don't pay rent to the freeholder, but you do pay "management fees" which are supposed to cover insurance and "admin." You may also pay "ground rent" which is a small-ish fee to cover use of the land on which the building stands.
In reality freeholders often do a deal with insurance companies. They get insurance at a reduced rate and don't pass on the savings to leaseholders. There are various other scams that can make leaseholding a nightmare.
This is all completely unrelated to renting. As a leaseholder you're an owner, for varying values of "temporarily".
If your flat has a 999 year lease you can easily sell it on or if it has a share of the freehold.
If it's <99 years nd there's no share of the freehold it gets harder to sell. And by the time you get to <50 years you're going to have serious problems selling it, unless it has some outstanding features or benefits to compensate or you're in a market segment which is happy to treat the money as a simple rental (which does happen, especially at the high end).
I don't really see what the issue is, it's just another option. You can buy a freehold, a leasehold for typically a kiloyear new or whatever remains (which will be accordingly cheaper), or rent.
Edit: sorry, in Scotland it is called freehold or feuhold not commonhold but could be considered equivalent. I believe commonhold is also used in the US.
In fact, I propose that we incorporate this system at a larger scale in the USA.
Housing obtained at subsidized rate shouldn’t be treated as a speculative asset as the people signing up will likely never qualify for housing loans, normal interest rates or even have the ability to put down down payments. Especially in desirable areas. The goal is to provide stable affordable housing for those who are housing insecure. The market place has been made accessible to them for habitat and not to get an unfair advantage as a speculative play.
Do you have any source where I can look at the numbers?
ETA: the same system here in the us is called BMR or below market rent apartments. It’s not social housing or section 8. There are also 55+ only senior communities to assure that seniors are not priced out due to housing insecurity/eviction threats.
The government does sell leaseholds of their home to council tenants through the right to buy scheme, but in general leaseholds are not a government scheme: they are sold and bought between private parties.
In the past I understand that a significant percentage of the UK population used to be council tenants but the through the right to buy scheme the government got rid of a lot of housing stock and it only replenished a fraction of it.