Leasehold Derangement Syndrome

Anyone who's spent any time discussing the UK leasehold issue on Twitter will likely have encountered this parallel universe of wishful thinking and self-delusion that seems to afflict many leaseholder advocates, understandably so in some cases where the leaseholder has been seriously harmed. Combined with a firehose of half-truths and misdirections from the pro-sector voices, it leaves the whole space a toxic wasteland.

I've documented at some length just *one* of the outrageous claims of the sector, namely the "Agency Canard" (effectively denying that ownership and management are separable, despite centuries of representative democracy and publicly traded companies). They use this to scare people into not obtaining control of the management of blocks of flats, on the theory that being able to appoint a new manager is somehow the obligation to actually do that manager's job. How do people have time to make this absurd claim, when they must be doing the jobs of everyone they can afford to employ?

But what of the sector's voluble opponents?

Leasehold Derangement Syndrome is like the "sovereign citizens" and "freeman on the land" nonsense that spread on the internet in the 1990s. There's a lot of pseudolaw and pseudoeconomics raised. At least *some* of it sounds like the sort of front that one would maintain if one were trying to bring a case for having been missold a lease, so conceivably a bent lawyer might be pushing some of this stuff. But leaving the the misselling-whisperers to one side, there's obviously a point here about debt-forgiveness, and trying to hold a particular self-contradictory ideological position together. The rest seems to be the sort of "sympathetic magic" thinking that is described in some of the academic work about pseudolaw.

Now when this was knocked about in the Canadian courts in Meads v Meads, it was pretty obvious that some of the pushers of pseudolaw were both victims as well as perpetrators: that is, that pseudolaw is a commercial scam. That's not what's going on with Leasehold Derangement Syndrome, except for the misselling version of it. Anyone who's got the time to push LDS ideas on Twitter is almost certainly a victim, not of LDS ideology, but of the property sector itself.

The main claims

So what is the actual content of Leasehold Derangement Syndrome claims? I'd say it's mainly the following:

• that leasehold isn't ownership
• that leasehold is "feudal"
• that ground rent is not deferred consideration for the lease, but some kind of charge for a non-existent service
• that one or other government or political party promised leasehold abolition
• that it is feasible to abolish leasehold in one fell swoop within a single Parliament
• that Marriage Value is somehow created by the operation of law rather than an empirically verifiable emergent property of human economic behaviour
• that commonhold is better than leasehold or share-of-freehold in all situations
• that there was no ground rent cap in the 2024 reform legislation
• that because Scotland supposedly abolished leasehold quickly, the same would be possible in England and Wales
• the leasehold isn't used outside the UK
• that Shared Ownership is generally not leasehold

At least some of this has deeper, darker intellectual roots, in the Labour Theory of Value and older ideas about usury. There's an unease among some about income that can be branded as "unearned", and it's a sitting duck that politicians might expropriate given enough social licence.

The last four of that list are straightforward factually false claims. It's not a matter of opinion where reasonable people might sincerely disagree, unlike the feasibility or otherwise of wholesale leasehold abolition. The precise comparison of commonhold versus other tenures is a matter of reading through hundreds of pages of academic writing, which you can forgive laymen for not having done.

A lot of the remaining arguments serve to make discussion about feasible reforms much more difficult. How can you discuss a fairer way to cut a cake, when someone is denying that the cake exists? That's where we are with marriage value and ground rents.

It's telling that those claiming "leasehold isn't ownership" haven't really thought deeply about what "ownership" even means in a legal system and what it could mean in relation to unmovable potential property such as land. But of course a lot of people don't believe there is or should be a legal system, despite the common sense evidence that one exists and that people and officials mostly follow it.

Ground rents

The core of the problem is ground rents and reversions: that's where the rubber hits the road: the financial element. If people could afford to buy their way out of what is a disguised debt, and be rid of the situation, that's what they'd do. But really we have tens of billions of pounds in ground rent and reversion assets, and realistically their owners are not going to sit by while those assets are devalued by political or judicial action.

It's instructive to note that way that the arguments about the nature of ground rent have this warping effect on economics. It's like the Catholic Church defending the geocentric model of the solar system: each time an astronomer found a new defect, they'd add a new "epicycle". So too with ground rents. Once you *start* from the position that they're not deferred consideration, you end up having to explain away a lot of inconvenient stuff. The process goes something like this:

• the leasehold problems (or my leasehold problems in particular) would go away or be much less serious if we didn't have to pay so much, or at all, to obtain the freehold over the flat or the building it is part of
• we shouldn't have to pay so much (not least as we've been exploited, abused, defrauded or missold to)
• legally, we shouldn't have to pay
• therefore, legally we don't have to pay (David Hume is turning in his grave at this point)
• therefore, the capitalised ground rent, or indeed the reversion, for the flat is worth zero
• so it can't be the case that a flat with zero ground rent sells for more than if it were sold with ground rent
• this is somehow different from the price paid up front for a home being higher if there's no mortgage
• flats are never sold with the option of ground rent or no ground rent
• but if a second-hand flat is offered with at a higher price if the seller does a back-to-back lease extension, that's somehow not fatal to the argument and not at all like a mortgage situation - leasehold flats are just special and normal supply-and-demand and time-value-of-money doesn't apply to them for some reason that can't be explained

It's hopeless.