The government wants to make it “easier and cheaper” a politically useful, broadly appealing, positive message.
But the reality below is more complicated. As proposed in recent white papers, ordinary reforms do not eliminate costs – they shift it. And the shifts are straight on the shoulders of individual flat owners. 
The story here is not about cheaper ownership, but about cost visibility.
After all, 80% of reformer rhetoric focuses on rip-off landlords and their agents. However, if the true cost of ownership becomes visible, you may need to blame the value of the flat.
I can't see
In the current leasehold system, freeholders have at least some burden, or capital expenditure forecasts, with the general risk of the building being on their shoulders. Under normal circumstances, it is handed over to the homeowner.
It may sound like a fair deal for more control and responsibility. But the financial implications are true.
It may sound like a fair deal for more control and responsibility. But the financial implications are true.
The landlord's monkey business is removed and under normal circumstances the capital cost for operating the building is not small just because it is currently divided among the flat owners.
Each cooperative owner has a different agenda and vision of how the building operates, which can be difficult to manage. And, as a wake-up, the cost is faster.
Under normal circumstances, there is no place to hide. Lifting the failure and hiking insurance – it all lands on the owner. And here's the part that most reformers don't want to say: It appears in service charges, reserve donations, and ultimately real estate prices.
Structure reset
It is usually sold as a modification and is more transparent and accountable. It may be that way, but since no one takes the risk anymore, it is also the democratization of ownership liability.
If your neighbor doesn't pay, someone has to cover it. For example, if you have a £40,000 reserve fund contribution per flat that you will need in 20 years, you have no choice but to contribute.
And that doesn't matter what the fact you're moving by then. That liability (excluding the inflation index) is £2,000 a year and the mortgage rate is 5%, which is equivalent to borrowing the purchase price of £40,000. And that's before you pay for building insurance or “common” cleaning.
Management agents show that costs escalate over a long period of time and payments are not indexed to match price increases, so payments rarely occur for scheduled work.
The ordinary whitepaper example sounds like a manageable reserve fund, but because of its contribution, budgets at these levels do not accomplish serious work.
Therefore, if flat buyers pay ownership prepaid and price annual indexed cost structures at service charges from day one, they may be forced to evaluate their dream home differently. Not because flats are worse homes, but because they are now priced with full liabilities in sight.
Price correction
Baby boomers and XERs who buy apartments decades ago went very well from tenancy ownership, especially if they went to the market to buy a house and then left afterwards.
Its success gave a false sense of comfort as I am used to the idea that homeowners would rate it by default. When economics changes, so does evaluation.
Flats may simply be overvalued – not by mistake, but because the cost of ownership was either low or hidden.
Flats may simply be overvalued – not by mistake, but because the cost of ownership was either low or hidden.
As these costs emerge, the upheavals that follow the Grenfell Tower tragedy may show what risks are in practice, and may need to adjust for financially unrecoverable penalties, funding and regulatory compliance (the big one that doesn't show anything nowadays). It's not a failure of reform, but how the market works when given better data.
And maybe that's a quiet purpose here. Reproduce the market, reset the value and let the new kind of owned model find its footing.
trade off
Two consecutive governments have pledged to reform the leasehold. But we should stop pretending it comes without a trade-off. It's not a silver bullet to make every home ownership mistake right. The exact opposite is that reforms work, and that markets can maintain change without too many price adjustments, is a leap of faith, and it is in both directions.
After all, our society has nothing less than housing price inflation. Home ownership is no longer possible for even more people, making savings pointless.
The risk won't go away – it's a shared, and while it might be a better model, it's not necessarily a cheaper model. What we see is the real cost of running a building that finally comes to the surface, and when that happens, the pricing conversation can change.
Of course, we need to be given an important timeline to know if the reforms worked or not.
Mark Wilson is Director of MyLeasehold and a member of ALEP (Association of Rental Stock Environmental Practitioners).
