What the Old Country Might Learn From Our Strata System

Howard Stewart, the late, great patron of my early legal practice, and one-time CEO of Body Corporate Services (Queensland), frequently reminded me that all land titling systems come from feudal times. He waxed lyrical about ‘Barons and Serfs’. How the nobility in medieval times subdivided the land into lots, then granted these lots to peasants. In return, the peasants paid rent in the form of a share of their crops. Somehow, we would get from there to strata subdivision of land, buildings, and airspace. He was a great storyteller.

Next week I’m speaking at Kings College London for the Free Leaseholders organisation. I’ll talk about how they might consider adopting our strata title system as they seek to revive their form of strata, which they call commonhold. Howard would be thrilled!

Commonhold, first promoted in England some twenty years ago as an alternative to the feudal leasehold system, has gone over like a lead balloon. The numbers don’t lie. There are over 5 million leasehold flats in England and just 20 commonhold developments. While commonhold has not yet done leasehold in, it’s a work in progress and deserves support.

For Australian readers unfamiliar with the English leasehold system of property ownership, if you think strata can be problematic, imagine this: you buy your flat in one of the world’s most expensive property markets, but all you own is the right to occupy the space for a limited time. You have no say on what repairs are done, by whom, how or when, but as the leaseholder, you must pay the bill. And you must pay a ground lease rent each year. As well as service charges and insurance commission (yes, it happens in the UK too). And when, if, the lease is extended, you must pay a share of the uplift in value to the freeholder. It’s called ‘marriage value’, reflecting the extent to which the leaseholder and freeholder are intertwined. This system makes Queensland-styled 25-year management rights look positively benevolent.

Repealing leasehold in England and Wales is not my battle. Still, it feels a bit like watching the school bully pick on the special kid. It’s just wrong to walk past.

My talk is titled: Strata title: A perfectly imperfect model for commonhold revival in England and Wales. The aim is to explain why Australia chose a freehold strata title system in preference to leasehold. How strata is performing here, and the steps we’re taking to make the system better.

Our system is far from perfect, but it’s much better than what today’s barons are doing to the modern serfs in the old country.

PS There are still a few tickets available: https://luma.com/03kvcdyu.