A Housing Forum Good Practice Guide Sustainable Leasehold and Long-term Asset Management 23 This task would be well suited to a working group of The Housing Forum who could co-ordinate ideas. Packington Estate regeneration, Islington, North London, Hyde Housing. Image supplied by Rydon the contractor/ developer. Designed by architect, Pollard Thomas Edwards. process and a reduction in management fee should be offered. Others felt that if the landlord is entitled to recover these costs, they should indeed seek to recover. All working group members agreed, however, that challenges and disputes will diminish if the landlord is transparent with costings and can demonstrate to leaseholders the value they receive for the services. Social landlords adopt widely differing approaches to Section 20 consultation. One that our group came across insists on having individual block costs for a cyclical redecoration programme, which, while being a belt-and-braces approach, is expensive and administratively intensive. It struck us that it could lead to greater efficiencies across the sector if a group of social landlords jointly developed a robust way of dealing with Section 20 and other leasehold issues. Optimising leasehold reversions One of the major sources of income that housing associations and social landlords will increasingly be able to tap into in the coming years is the money they will be able to collect from extending the length of leases. The importance of considering this aspect of a landlord’s work should not be underestimated. With an unexpired lease of less than 80 years, it is very difficult for a purchaser to obtain a mortgage. This means that a leaseholder who is at 80 years unexpired or approaching that milestone will need to agree a lease extension. The value of this extension is called the leasehold reversion and it will become a major aspect of the social landlord’s business negotiating these reversions. The basic calculation every landlord should carry out and keep under constant review is the value of leasehold reversion plus any income versus cost of maintaining, administering and insuring the property. This calculation will inform the landlord’s overall asset management strategy and help decide whether to repair or dispose. This is a complex calculation but it offers the landlord an opportunity to share in the value of the property. As a landlord’s leasehold stock matures, such lease extensions should offer a strong stream of long-term income.
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