I should explain in more detail. I pose the question because of the recent and widely reported leasehold ground rent escalator scandal.
Leasehold (and Freehold)
As most people know, land in England comes in three types: freehold, leasehold and a recent addition, commonhold, but commonhold is rare. Freehold is as good as outright ownership, whereas a lease comes to an end. Oddly enough, long leases (traditionally 99 years for dwellings but sometimes 999 years or longer) and short leases (typically 6 months to 3 years and often periodical – automatically renewing) use the same conceptual apparatus, despite being very different in character. Short leases typically have high rents and (virtually) zero capital values. Long leases typically have low rents and high capital values – the lease is ‘valuable’ and is often sold on (‘assigned’). Short leases, while subject to their own problems, are not the subject of this post or the scandal.
Land ownership changed in England after the Normans arrived in 1066 and substituted a new legal system. Land was parcelled out to William I’s tenants-in-chief. In a process called ‘subinfeudation’, smaller parcels of land were then issued to sub-tenants, whose landlords were the tenants-in-chief. The process was repeated and a ‘feudal pyramid’ of land was created.
Such tenancies were not necessarily for money. Knight’s service, for instance, was land in exchange for performing military services. As the centuries went by, the feudal system became unwieldy and needed reform. Subinfeudation was ended as early as 1215 by the statute Quia Emptores. Many parts of the feudal land system declined and inflation rendered many feudal dues worthless. The decline of the system was capped in 1660 by the Abolition of Tenures Act which converted most of the old tenancies to socage tenancy, which would eventually become freehold.
That is a very potted guide. Leasehold is conspicuous by its absence from it. But leasehold is absent from even a full explanation of English feudal land tenure. It grew up outside the feudal system and was a way to let land without the restrictions of the feudal system – some described above, some not. So, technically speaking, leasehold is not feudal. Freehold is.
What leasehold shares with feudalism is that there is a lord who is not nominal (freeholders are technically tenants in fee simple of Her Majesty absolute in possession, but do not need to worry that the Crown will demand the land back or the performance of other obligations). The most significant similarity is that the land will revert to the lord when the lease’s term is up (or if it is forfeited). The other is that there can obligations such be rent (there can be rentcharges over freehold land but they are rare and can no longer be created). The term can be made artificially long (thousands of years) and the rent can be set to zero or some nominal amount (traditionally a peppercorn), in which case the tenant enjoys a much more durable interest in the land (more on service charges in a future post). But this is not always the case.
So as an analogy, one can say that leasehold is feudal in character. And when the lease is rendered worthless by the ground rent escalator, this is a very powerful analogy. It harks back to brutal times, and it is something of a understatement to say the victims of this scandal have been dealt with brutally.
Where the analogy runs out is when lazy comparisons are made. The Abolition of Feudal Tenure (Scotland) Act 2000’s closest analogy is the 1660 Act, which indeed abolished feudal tenures. A fat lot of good that did to prevent this scandal. So saying ‘we have abolished feudalism in Scotland, why not do in in England’ is missing the point. We did. It just left leasehold intact.
Therefore characterising leasehold as being feudal in character runs the risk of clouding the real issues.
Abolishing leasehold for houses – or at least preventing any new leaseholds over domestic housing being created – is a worthy project and relatively simple. Abolishing leasehold for flats is considerably more difficult and will be the subject of another post.