But will the government unravel before implementation?
By Sebastian O’Kelly
For the first time in the ten-year struggle of the Leasehold Knowledge Partnership we have in Lucy Frazer KC a housing minister who seems to understand at the outset leasehold’s injustices and how legal stratagems invariably keep freeholders coming out on top.
She told the All-Party Parliamentary Group on leasehold and commonhold reform on 12 December that she had read the Law Commission reports on leasehold reform. As she is a former senior barrister, leaseholders may be optimistic that she understood them, too.
Mrs Frazer was particularly alert to the incessant gaming of legal costs, which account for so many of landlords’ easy victories in the ever-accommodating property tribunal. Of course, many other challenges never get started because of the unbalanced cost regime.
Put simply: landlords get their costs under the lease, leaseholders can blow a packet on lawyers but will never get theirs.
“We are really keen to look at the issue about costs,” Mrs Frazer told the All-Party Parliamentary Group on leasehold and commonhold reform on 12 December.
“I know, as a former lawyer, that costs are a reason why people sometimes don’t take things to court, and they can escalate. And so we do want to make sure that the system process is fair and that leaseholders will be able to recover their costs.
“And leaseholders should not be subjected to unjustified legal costs.”
Sir Peter Bottomley, the APPG co-chair, added for good measure that she needed to look at leaseholders excluded from the insurance ombudsman because they are not a legal party to landlord-placed insurance contracts (although they pay for it all).
Mrs Frazer promised to do so.
Overall, the minister went out of her way to reassure leaseholders than the leasehold reform agenda is a priority and that the government is fully committed – even though, as Lord Truscott (Labour) pointed out, it only has 18 months or so to deliver.
The minister said:
“Leasehold reform is absolutely critical to the government and we have a secretary of state (Michael Gove) who has a reputation for delivering significant reforms, and it is very important to be working with him on that agenda …
“I think we have a shared agenda to end unfair practices in the leasehold market and I know, and I’ve read the Law Commission’s important recommendations in this area.”
A number of questioners in the audience quizzed the minister on when these reforms would come in, the most noteworthy came from former leasehold and cladding minister Lord (Stephen) Greenhalgh.
He asked where the leasehold reforms stood within the wider housing agenda of levelling up, increasing supply, planning and private rented sector reforms.
“I fear that might be a question to ask the secretary of state,” was the minister’s reply.
Leaseholders will be eager to see whether leasehold reform makes it into the King’s Speech next year, as it was reputedly pushed out of the Queen’s Speech in April by Boris Johnson’s Number 10 strategists, before his own removal.
Of course, a big concern then will be whether the leasehold reforms – outlined in the Law Commission, understood and refined by officials – actually gets over the line before the expected election in 2024.
The minister said:
“I know that the Law Commission has done significant amount of work on this issue, and I’d like to thank them for their extremely detailed work.
“They’ve made over 300 recommendations. And I have spent hours with the team in the department building up my understanding of the issues that you’ve been looking at for some time.
“Because I want to consider all those recommendations in detail to see how we can bring them forward and make sure we get it right, because we do want legislation that works.”
She also made clear that issues concerning building safety are part of the portfolio of Lee Rowley, the Parliamentary Under-Secretary of State for Local Government and Building Safety.
Ripped off leaseholder
What about the Regulation of Managing Agents, promised years ago?
Firstport now Emeria without fail add £500/leaseholder every end of the adjustments. That’s 800 units in my estate. The explanations had to extracted with the most reluctance. The explanations were fuzzy, so confusing that you simply give up. Surprise MCA is not willing to investigate. Perhaps, it’s not a rip off affected a small portion of the population unlike cost of energy crisis.
Firstport now Emeria without fail add £500/leaseholder every end of the year adjustments. That’s 800 units in my estate. The explanations had to extracted with the most reluctance. The explanations were fuzzy, so confusing that you simply give up. Surprise MCA is not willing to investigate. Perhaps, it’s not a rip off affected a small portion of the population unlike cost of energy crisis.
I’m a leaseholder of a retirement apartment in one of the 30-odd Retirement Security properties (Courts) that were created over the last 33 or so years. The original leases were set up with Management Agreements that made RS the Services Manager (Managing Agent). The financial affairs of each Court is the responsibility of the Court’s Board of Directors. RS do not charge Ground Rents and there is no charge for lease extensions (at the last notes on policy). Each of the Courts is a not-for-profit business. This means that if a Board of Directors are authorised by the Owners to change Services Manager, I have never found a competent Services Manager (or agent of a block management company) who is interested in taking on the Court, with one exception.
In 2021, there was a period of six months during which when we had three months of only partial Services Managemant and another three months of very sparse service. During this time the Board had to take decisions about the Court’s affairs which should have been dealt with by a Services Manager.
We have calculated (as fairly as possible) the proportion of our Management Fee (about £7500) for which we ought to be recompensed. During this time the Board had to take serious decisions about the Court’s affairs which should have been dealt with by a Services Manager.
As a Board, we have complained about this to RS with no result except an offer of £1300, which we were advised by our Services Manager to accept, and eventually did. The new CEO was unable to offer an amount commensurate with our work during the six months, although she admitted that mistakes had been made. I later embarked on RS’s formal Complaints Procedure. By the time I had a reply from RS’s Company Secretary, it had become clear that RS would not reply to my basis of complaint, which was non-perfomance of the terms of the Management Agreement. Instead, they used the terms of the Lease to threaten me with the argument that if I were compensated as an individual member of the Board and an Owner, an accusation could be made of non-payment of my part of the Service Charge attributable to Management Services. I decided to drop the matter because I could see no way forward and felt that no good could come of further action.
RS is a member of ARCO and of ARHM. I’ve studied their Codes of Practice and concluded that they are in breach of best (or even decent) practice in this matter. Unfortunately, the way the Complaints Procedures are set up one has to have exhausted the Managing Agent’s Complaints Procedure before approaching the trade organisations, and then an Ombudsman.
This is all very discouraging. Good luck to us all. Thank you for all your efforts to improve things, which I’ve followed with interest since the days of Carlex.
Unfortunately for leaseholders the word commission is written into the small print of a leaseholders contact. The commission is ambiguous in that it does not mention specifics
ie’ amount of commission and what it apples to – building Insurance springs to mind. Major works also present the Managing agent with an opportunity to add yet more commissions sometimes as much as 20% listed as consultancy fees and other.
SORRY – I`m sticking my nose again into matters in which I`m not immediately affected – but the synergies between the leasehold fiascos and the grossly exploitative semi and retiement residential Park Homes market are much akin – the hallmarks being the so far enabled insatiable greed of those who couln`t give a toss about social well-being, decent housing and the environments in which decent people are expected or forced to live – instead in grossly profiteering and in perpetuating fuedalism.
The now involvement of Luzy Frazer KC is a welcome move forward and hopefully, she will recognise the same and spread her wings further. What has always been needed is competent leadership and continuity, so hopefully she`ll remain in place for as long as possbile. There`s much to be done and with an election looming, not a lot of time to do it. So let`s hope she can make the most of it.
I won’t hold my breath with any housing minister actions speak louder than words. Many moons ago Mark Prisk MP was ex Property Manager and housing minister so understood all too well exactly what was happening, but as soon as he started reform he disappeared as have all the other housing ministers that try to push things through.
Government just does not have a stomach for it and doesn’t’ want to upset those at the top who help to fill their coffers.
This whole fiasco with everything relating to flats, cladding, ground rent, greedy freeholders with insurance, Section 20’s, electric you name it they contaminate it and on and on. I would suggest labour need to get a grip of all this and in doing so, would probably secure a huge majority of votes for those effected by all these scandals.
Is the formula that is used to calculate what the freeholders through their managing agents use to calculate the price that leaseholders must pay to renew their expiring leases? In many cases leaseholders cannot afford to renew their leases because the extortionate charges that freeholders and their agents demand, nor can leaseholders afford to challenge these exorbitant charges and fees as in general, the Tribunals would use the same very archaic formula in reviewing any challenge. So, until or unless this onerous cumbersome unfair formula is drastically modified or removed, leasehold renewals will continue to be a win-win situation for freeholders and a lose-lose one for leaseholders.
Hear hear Rawlston’s comment above.
Also, a better formula for Freeholder ‘compensation’ is required. Already for example our small development of flats have handed over £90,000+ in ground rent. It will be reviewed in 2028 and they will naturally increase it and we will have to pay a share of surveyor costs etc.. Even worse will come if we contest it! It is already 0.2% and not set at 0.1%
EVERYTHING is weighted against the (very) poor Leaseholder not only with GR, MA charges, permission fees etc., plus Council Tax … It is good that along with Sir Peter Bottomley and a handful of others who do understand the injustice of a totally corrupt and outdated system and now latterly Lucy Frazer KC, might be able to get the desperately needed major reform through within this Government’s last gasps of control?
The past has been bleak enough, we do not need an even bleaker future!
What a brilliant response to an awkward question….. well, that’s a question you need to address to someone else!
Why didn’t I think of that? The next time somebody asks a question, where providing a truthful answer would expose me as being a total *hit, I’ll deflect it and say you really ought to ask that of etc.etc.
Call me an old cynic ( I’ve been called a hell of a lot worse I can tell you) but with these Tories I wouldn’t trust anything they say. The Landlord-Tenant chasm can never be bridged, because its rooted in our materialistic money driven culture. The judges earn £000,000;s…. and are part of the establishment , and its members of the establishment that own the properties. QED.
There also needs to be implementation and enforcement of regulation of managing agents.
Unenforced trade association Codes of Practice such as that of the
‘Association of Retirement Home Managers’ are a failure and just make a mockery of having Parliamentary Approval.
Lease extension is the largest cost and greyest area. A calculator or methodology would be the best single step while they untangle all of the other leasehold complexities. Perhaps combined with a cap on hidden legal fees.
Our leaseholder is a investment firm, who appointed a trustee which is the same company as our property management firm, lots of conflicts of interest.
The ARHM (Association of Retirement Home Managers) also abuse the Tribunal costs system.
Parliamentary approval of the ARHM Code of Practice is used by the ARHM and members for advertising purposes only, and without any intention whatsoever of enforcement or compliance!
The ARHM’s Code of Practice is a failure and the ARHM instructs leaseholders that complain to them to take matters to the FTT.