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| Leaseholds are not the problem – abuse of them is | Leaseholds are not the problem – abuse of them is |
| (6 months later) | |
| This scandal shows how normal it has become to expect to ‘earn’ exploitative rewards without risk or commensurate investment, writes Stephen Hill | |
| Letters | |
| Thu 3 Aug 2017 18.53 BST | |
| Last modified on Mon 27 Nov 2017 19.01 GMT | |
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| The abuse of leaseholds (Editorial, 26 July) is exactly that: abuse. There is nothing intrinsically wrong with leasehold/freehold arrangements in the hands of responsible (and preferably regulated) landlords. It’s worth thinking why they were invented and have endured for centuries. They are a highly effective way of allocating capital, risk and reward in the use of land and buildings; they are still much used in commercial property transactions for that purpose. By contrast, private finance initiatives and similar arrangements are designed primarily to make money for all the intermediaries in a set of parasitical financial relationships, all of which could have been structured just as well and more cheaply with leases. | The abuse of leaseholds (Editorial, 26 July) is exactly that: abuse. There is nothing intrinsically wrong with leasehold/freehold arrangements in the hands of responsible (and preferably regulated) landlords. It’s worth thinking why they were invented and have endured for centuries. They are a highly effective way of allocating capital, risk and reward in the use of land and buildings; they are still much used in commercial property transactions for that purpose. By contrast, private finance initiatives and similar arrangements are designed primarily to make money for all the intermediaries in a set of parasitical financial relationships, all of which could have been structured just as well and more cheaply with leases. |
| This scandal simply shows how normal it has become to expect to “earn” totally exploitative rewards, without risk or commensurate investment. This is just more evidence of the damaging commodification of land, and how, since financial deregulation, global capital flows graze effortlessly on our local housing markets for the risk-free excess profits they so willingly give up. The economist Martin Wolf rightly calls this “the greatest misallocation of resources imaginable”. | This scandal simply shows how normal it has become to expect to “earn” totally exploitative rewards, without risk or commensurate investment. This is just more evidence of the damaging commodification of land, and how, since financial deregulation, global capital flows graze effortlessly on our local housing markets for the risk-free excess profits they so willingly give up. The economist Martin Wolf rightly calls this “the greatest misallocation of resources imaginable”. |
| A ban on leasehold houses would just be treating a minor symptom of a potentially terminal sickness. It would change nothing important. Stop and remedy the abuse, of course. Update and reform the mess that is our leasehold enfranchisement legislation. Reimagine leasehold as a way of resisting the financialisation of housing markets, as community land trusts now do. Focus mostly on putting property into the hands of occupiers. Follow the example of many residents’ management companies, and community land trust, cooperative and cohousing freeholders who manage their homes equitably in the long-term interest of their residents.Stephen Hill(Land economist), London | A ban on leasehold houses would just be treating a minor symptom of a potentially terminal sickness. It would change nothing important. Stop and remedy the abuse, of course. Update and reform the mess that is our leasehold enfranchisement legislation. Reimagine leasehold as a way of resisting the financialisation of housing markets, as community land trusts now do. Focus mostly on putting property into the hands of occupiers. Follow the example of many residents’ management companies, and community land trust, cooperative and cohousing freeholders who manage their homes equitably in the long-term interest of their residents.Stephen Hill(Land economist), London |
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| • Read more Guardian letters – click here to visit gu.com/letters | • Read more Guardian letters – click here to visit gu.com/letters |
| Leasehold | |
| Economics | |
| Private finance initiative | |
| Property | |
| Housing | |
| Communities | |
| letters | |
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