LEASE 2013: ‘Leasehold must reform, or media will sink their teeth in’

BottomleyLEASE

What a difference a year makes. In 2012 LEASE, the Leasehold Advisory Service, held its “annual conference” in a Mayfair hotel charging £310 a head and the event was a blatant trade show for the vested interests in the leasehold sector.

Leaseholders themselves – apart from an emotional gatecrasher, read here – were entirely absent.

Yesterday, the 2013 LEASE annual conference was held in a utilitarian conference centre in Southwark, the lowest cost was a more modest £250, and the whole approach and tone had changed markedly.

Furthermore, in a first for LEASE, leaseholders were actually invited to the conference for an evening event.

And there were other dramatic developments yesterday.

For a start, the event was addressed (by video) by Housing Minister Mark Prisk, who did some stern finger-wagging at rogue managing agents, all of whom now have to join an Ombudsman scheme.

Then Sir Peter Bottomley (above), the Conservative MP for Worthing West and leading political figure on leasehold issues, attended at the last minute as a guest speaker. He showered charm and honeyed words, but razor blades lay within (of which more below).

One who was taking no chances, was barrister Justin Bates.

Ten minutes before the conference began, and for reasons that remain unexplained, he pulled out of giving a talk on “cross-examination in the LVT – what should managing agents know?” So, helpful advice on de-railing leaseholder questioning. LKP has publicly stated its view, also expressed in a letter to Mark Prisk, that this presentation was inappropriate for an event hosted by a taxpayer-funded organisation set up to aid leaseholders.

Bates was part of the legal team representing the freeholder in the Oakland Court case in Sir Peter’s Worthing constituency. The MP described in the Commons the stratagems used against the pensioner leaseholders as “legal torture”.

Bates is also fighting the right to manage applications of two retirement sites in Plymouth, in a case which is being closely followed by both Sir Peter and Mark Prisk.

In contrast, those who were assiduous in their attendance were the two leaseholder civil servants responsible for leasehold policy at the Department of Communities and Local Government. They attended the conference from beginning to end yesterday.

It turned out to be a long day. After the paid–for professional conference, LEASE introduced the novelty of inviting leaseholders to its annual conference with a free evening event, which lasted until 9pm.

Around 300 attended, bringing with them assorted leasehold problems – or airing at length perceived injustices – which were addressed with varying degrees of success by lawyers and leasehold experts (of which more later).

To sum up: LEASE’s annual conference this year actually began to resemble an annual conference. It was a far more serious engagement with the bitter disputes and conflicts that beset leasehold than LEASE has staged in the past.

There remain concerns. LEASE’s monetising initiatives with the commercial and professional interests sit uneasily with what Parliament envisaged as its primary purpose of helping ordinary leaseholders.

But at least this year there was no repeat of the, frankly disgraceful, presentation on how to load insurance commissions and keep them secret from leaseholders which was a feature of the 2010 event.

Here are some of the 2013 highlights:

In his video address, Housing Minister Mark Prisk said that statutory regulation of managing agents was not government policy. But he talked up the initiative of making all managing agents join Ombudsman schemes.

“I do not believe that most [managing agents] provide a bad service but it is clear that some do not come up to scratch. We are determined to do something about that.”

Sir Peter Bottomley warned the sector that it was under close scrutiny, and that rogue freeholders and their managing agents are going to be named.

“MPs are aware of the problems,” he said. “They have read LKP and they know about the case involving Dennis Jackson at Plantation Wharf.

“MPs lag a year and a half behind these things, and the media by six months. By the time you start putting things right, they will have their teeth into you.”

Reputations can rise and fall very quickly, said Sir Peter, who drew comparison with Google: a year ago most would have thought of it as a brilliant internet search company; now, they would think about tax.

He issued a stern warning to freeholders sitting on assets that have been pledged to banks at triple their real values who have also remorselessly monetized their sites.

“The amount of publicity heading their way is going to be huge,” he said.

Siobhan McGrath, President of the Residential Property Tribunal Service, outlined the changes to the LVT system.

From July 1 the LVT will become the new First-tier Tribunal (Property Chamber). LKP will explain this in detail in a separate article.

On prompting from both Sir Peter Bottomley and LKP, McGrath agreed that the publication of the LVT decisions on the Ministry of Justice website must be improved.

It is hugely frustrating that useful LVT rulings are haphazardly reproduced on the Ministry of Justice website. Most are just pdf photocopies of the rulings. Some are missing, or are impossible to find.

Liz Peace, chief executive of the British Property Federation, gave a joint session with Stuart Corbyn, of the Qatari Diar Delancey East Village development at the Olympic village.

This is the latest billion pound Qatari investment in London property but the site is going to be build-to-let to tenants on three-year leases.

Peace, who is the most powerful woman in British property, has been talking up build-to-let for 10 years and here is a massive scheme that will realize this idea.

If build-to-let does attract massive institutional investment, then it is obvious that current inadequate leasehold protections need to be overhauled.

Keith Hill, the new ARMA-Q regulator, introduced his scheme but emphasised that it was no substitute for statutory regulation.

“This is a sector with a lot of laws and little regulation. Conventional wisdom would have it that ARMA would be opposed to regulation [of managing agents].

“Yet ARMA supports a statutory regulatory regime with statutory penalties. I think that reflects very well on ARMA and its membership.”

Rob Plumb, chief executive of HML Holdings, a member of ARMA and of LKP, made the point that the regulator would not be regulating rogue freeholders, who employ the managing agents.

This was a point made in another context, by Ian Fletcher, head of residential at the British Property Federation: the people absent from the LEASE professional conference were the housebuilders who draw up leases and the freeholders who buy them.

A decent-ish managing agent can be led down the path of darkness by a bandit freeholder (of which, as LKP readers are aware, there is an abundance).

Professor James Driscoll, who is one of the leading authorities on leasehold law, gave an interesting resume of leasehold law over the past 30 years.

He posed the question: if leasehold law did not exist, is this really how we would regulate the ownership and management of residential property?

His own preference was for a commonhold system, and he did not doubt that it would happen at some point as the English become more used to living in flats.

A sunset clause for commonhold – a set date when it would be mandatory – was discussed during the Commonhold and Leasehold Reform Act 2002 discussions, but fell by the wayside.

The professor made an interesting observation about current enfranchisement litigation, particularly concerning Dolphin Square – the 1,250 apartment complex in Pimlico, favoured by (rich) politicians: variously William Hague, Harold Wilson, Kristine Keeler, Princess Anne etc.

Westbrook Dolphin Square v Friends Life is “not a leasehold dispute at all. This is a commercial dispute using leasehold law.”

Damian Greenish, a Chelsea-based solicitor who chaired both conferences, later agreed with this, saying “you are seeing wised up people who have the aim of enfranchising for commercial gain”.

It is not an issue we have covered at LKP, but should probably do so.

One of the most successful sessions of the conference was held by Nicholas Kissin, a solicitor and senior advisor at LEASE.

In a Socratic dialogue with the audience, he proposed a leasehold problem and then invited the audience to suggest how they would resolve this.

The result was a succession of high quality, and widely differing, suggestions that would be fascinating for many leaseholders.

One hopes the results, or something similar, will be accessible on YouTube.

At the evening event for leaseholders, Gerry Proctor, MBE, director of Engage Liverpool talked about how his extraordinary organization of leaseholders arrange affairs in the city.

It seems extraordinarily harmonious and has provided massive social benefit. Only one case has gone to LVT, with no lawyers employed “because Liverpool does not go in for expensive lawyers”.

A possible explanation for why Liverpool differs from the rest of the country is that the capital values have plummeted even more than say Leeds or Nottingham, and the city centre revival of Liverpool hangs by a thread. If all do not work together for the greater good, it will be a massive step backwards.

But it is an inspiring story, and one completely ignored in the wider media.

LKP has asked Gerry for his complete presentation.

James Naylor, a solicitor at Crabtree Property Law, gave a presentation on “the responsibilities and liabilities of directors of management and right to manage companies” – hindered by some rude interruptions by leaseholders wanting to air their own grievances.

It was a very useful guide, for those who cared to listen, and we will reproduce it on LKP.

Finally, Deep Sagar, the chairman of LEASE, ended the day asking for feedback.

Our view was this: the conference was a vast improvement.

It is the most intellectually robust discussion of leasehold issues.

It should be a permanent feature of LEASE to involve leaseholders at its annual conference.

We remain wary of LEASE organising fund-raising initiatives with the commercial interests in leasehold.

And we will be strongly critical of any return to presentations that advise freeholders and managing agents how to rip off leaseholders over insurance; or how to trip them up in the courts etc.

These should not be hosted by a taxpayer-funded organisation.

We look forward to further engagement with LEASE for the common good, and congratulate it and News on the Block for organising this event.

LEASE 2013: Pitiful contrast between professional and leaseholder sessions

By Martin Boyd

The contrast between day event for professionals in leasehold and the evening event for ordinary leaseholders could not have been more stark. Paupers and kings might be a good analogy.

While the day event saw the most talented in the leasehold world speak on a range of specialist topics, the evening event saw speakers at a very different level in their careers.

The professionals at the day event, who had paid £300, got:

Siobhan McGrath, President of the Residential Property Tribunal Service, set out the new procedures for the Property Chamber which will take over July 1;

Philip Rainey, QC, head of Tanfield Chambers, discuss the implications of the worrying Supreme court decision in Deajan v Benson and contrast it with the even more concerning Philips v Francis case;

Professor James Driscoll on the development of the law since 1993, and Katherine Holland, QC, on the role of experts in courts and tribunals.

The evening workshop got young professionals who are best not named.

The session entitled “Leasehold valuation Tribunal” at times descended into chaos. The speakers, who were not LEASE staff, set out the most basic of ABC guides to the types of issues that can be taken to the LVT.

They became unclear when asked which sections of which laws leaseholders should use to bring actions to replace the manager (s24 LTA 1987), or dispute the non provision of accounts (whole range of options, but s27 LTA 1985 is the main redress option, with maybe with a s24 case to remove the manager).

At one point the answer to a question were words to the effect “that’s not covered under a specific clause in the law”.

I was horror-struck to hear one speaker suggest that leaseholders should withhold service charges payment if accounts had not been provided!

[Read more...]

Prisk to Bottomley: what’s the evidence that the Leasehold Advisory Service is not ‘balanced’? Well, how about this for starters …

LEASElostitsway-Housing Minister Mark Prisk has rounded on Sir Peter Bottomley to demand why he believes that the Leasehold Advisory Service in not ‘balanced’.

Sir Peter, the Tory MP for Worthing West, made his comments in the Commons on April 16:

“To have clever lawyers, some of whom will appear at LEASE—the Government-approved agency for giving advice on leaseholds—advise managing agents on what can be done with leaseholders within the law does not strike me as balanced.”

Sir Peter added his view that either or both Sebastian O’Kelly and Martin Boyd, of the Leasehold Knowledge Partnership, join the board of the government quango, which receives a £1.4 million budget.

Sir Peter made his intervention as the Department of Communities and Local Government stamped its authority during the debate on the Enterprise and Regulatory Reform Bill.

It dumped a Lords amendment, from Baroness Gardner, to license block managing agents in favour of compulsory membership of various anonymous ombudsman schemes – whose rulings (to industry relief) are not published.

In a letter to Sir Peter – and forwarded to LKP / Carlex – Prisk writes: “I receive a full and varied postbag on residential leasehold issues, but I am not aware of any groundswell of complaints about the quality or propriety of LEASE’s service, and neither are my ministerial colleagues or policy officials here at DCLG.”

Had the DCLG officials turned up to last year’s annual conference of LEASE, to which they were invited, they would have witnessed a dramatic example of leaseholder dissatisfaction with LEASE.

The event at a Mayfair hotel, which cost £310 a head, was disrupted when an emotional leaseholder (who had not been invited) grabbed the microphone and told the conference:

“The Leasehold Advisory Service is failing to fulfill its parliamentary mandate by excluding leaseholders. It should be even-handed and defending their interests. Instead, it has organised an event purely to the benefit of landlords.” [Read more...]

Sebastian O’Kelly and Martin Boyd praised in House of Commons: put them on the board of LEASE and clear up the ‘muck’ of leasehold

BottomleySir Peter Bottomley (left) yesterday made his strongest Commons intervention yet on the scandals in leasehold. He named and praised the two keys figures in the Leasehold Knowledge Partnership, named and criticised Tchenguiz and urged a full debate on leasehold under the cover of parliamentary privilege.

He attacked the role of LEASE, the Leasehold Advisory Service, for being too close to the interests of freeholders and their professional advisors, rather than leaseholders.

“To have clever lawyers, some of whom will appear at LEASE—the Government-approved agency for giving advice on leaseholds—advise managing agents on what can be done with leaseholders within the law does not strike me as balanced.

 “I ask the Government to ask LEASE to ensure that at least one of the two people I will name is invited to join its board. One is Sebastian O’Kelly, who runs the Leasehold Knowledge Partnership, and the other is Martin Boyd.”

Boyd is the LKP strategist who guided Charter Quay, in Kingston, through four LVTs winning more than £500,000 back from the Tchenguiz freehold company.

Sir Peter was intervening in the debate over the Enterprise and Regulatory Reform Bill, to which Baroness Gardner had added the licensing of managing agents.

This infuriated the Department of Communities and Local Government – whose two officials concerned with leasehold appear to believe that their former colleague, Michelle Banks, chief executive of ARMA, can be left to sort the sector out in a manner congenial to her membership. [Read more...]

LEASE denies seeking bungs to pass ordinary leaseholders on to professional services

LEASE, the Leasehold Advisory Service, is a taxpayer-funded quango, so why on earth is it asking solicitors and others whether they would be prepared to pay referral fees to be put in touch with the distressed ordinary leaseholders who call up for advice?

Referral fees – or ‘bungs’ as they are less politely termed – are rife in the property world, but it is astonishing that a government agency considered accepting them.

LEASE says it does not accept referral fees, nor will it do so in the future.

Had it done so, LEASE would have been handing over leaseholders with serious legal or other problems to solicitors, managing agents, surveyors etc not because these firms have any particular merit, but because they had made a payment to the advisory service.

The evidence that LEASE was considering referral fees comes in the form of an emailed survey following the lavish ‘annual conference’ the quango held at a Mayfair hotel on May 15.

This was, in fact, a very expensive trade fair filled with representatives from RICS, ARMA, large-scale managing agents, landlords, solicitors and barristers.

[Read more...]

How you get scammed on insurance … with tips from LEASE!

It is a brilliant (not-so-little) earner and one that – astonishingly – isn’t illegal.

Buy up residential freeholds, charge enormous commissions for arranging the insurance and pass the bill on to leaseholders, who – and this is the really brilliant bit – have no legal right whatsoever to find out what the commissions are.

The Sunday Times earlier this week recommended that the wealthy buy up freeholds for the ground rents, adding: “Additional income comes from commissions for arranging building insurance …”

In fact, loading the insurance is the best gig in town.

[Read more...]

Leasehold Advisory Service: ‘Lawyers here won’t even speak to me, because I cannot afford their fees’

An emotional Julian Shersby, who lost £44,000 in an LVT action, tells the Leasehold Advisory Service conference it is failing ordinary leaseholders

In the last ten minutes the Leasehold Advisory Service annual conference burst into life this afternoon when a furious delegate grabbed the microphone and said the quango was failing to represent the interests of ordinary leaseholders.

“I see around me here landlords and managing agents and lots of lawyers who won’t even speak to me because I cannot afford their fees,” Julian Shersby, 49, told the conference.

“The Leasehold Advisory Service is failing to fulfill its parliamentary mandate by excluding leaseholders. It should be even-handed and defending their interests. Instead, it has organized an event purely to the benefit of landlords.

[Read more...]

LEASE: Find some backbone, or face the chop!

Anthony Essien (left), of LEASE … the Leasehold Advisory Service, at the London Assembly on January 23rd with large-scale managing agents Matthew Saye, of Home Ownership Services and Randall Bevis, of City West Homes. Martin Green (right), of Southwark Borough Council’s home ownership and tenant management initiatives.

January 24 2012: The weakest performance of all at yesterday’s Greater London Assembly meeting on the miseries facing leaseholders was from Anthony Essien, the chief executive of LEASE, the Leasehold Advisory Service.

Asked by London Assembly members how leaseholders can be defended from rapacious managing agents and landlords jacking up service charges, Essien placed his faith in mediation.

This was far preferable to the courts or the Leasehold Valuation Tribunals, which are too complex and expensive for many leaseholders to contemplate.

But LEASE’s own mediation service was hardly a resounding success, before being wound up in January last year.

“Despite a lot of effort and publicity, demand for this service has not justified the cost and attention the organisation has given it,” said the annual report.

In its last year, there were 78 applications for the service, with 25 sessions held and 20 settlements.

LEASE’s board decided, after careful consideration, that “resources should be concentrated on those services, such as our website, email advice, telephone advice and advice surgeries away from the office, that vulnerable customers clearly value”.

One issue the London Assembly is considering is whether LEASE should not be an advocate for leaseholders’ rights rather than be best friends with all, but that would be a marked change of gear for an organisation that puts most of its efforts into sitting on the fence.

Or, to use its own words, “LEASE is committed to working with leaseholders, professional organisations and others to empower leaseholders to have more control over their property, help our customers resolve their problems and to improve the standard of management in the sector respectively”.

How does that translate in practice when dealing with the likes of Vincent Tchenguiz and Peverel? Why is it so difficult to condemn those who hoover up freeholds, appoint themselves as managing agents, CCTV providers, lavatory attendants and the rest, and jack up the service charges?

These have been the subject of LVT rulings again and again.

For some time the government’s “bonfire of the quangos” has been smoldering away. It looks like LEASE is one piece of dead wood that no one would miss being tossed on the pyre.