Bellway Homes has out-manoeuvred 147 leaseholders’ right of first refusal to buy the freehold at Baltic Avenue, in Brentford, west London.
The leaseholders are mustering to take over the residents’ management company at the site, Baltic Avenue (Brentford) Management Company Limited.
On February 1 the housebuilder sold the freehold to Adriatic Land 6 (GR1) Limited whose beneficial ownership is hidden behind nominee directors of the Sanne group.
Bellway used the standard dodge of incorporating the freehold in another limited company that it has owned for two years and then sold it on. The right of first refusal is absurdly easy to manoeuvre around.
Lawyers at Gateley plc explain why Bellway is not “caught” by the 1987 Landlord and Tenant Act 1987 (below).
Bellway, which is enmired in the leasehold house scandal, has structured the leases with high ground rents of £450pa rising with RPI after eight years and then every five.
Unlike many other sites in London, Baltic Avenue has a high proportion of owner-occupiers owing to the taxpayer-assisted Help To Buy scheme.
The Help To Buy scheme has also been a help-to-invest scheme for the fortunate, but unknown, owners of Adriatic Land 6.
In December the leaseholders elected eight directors for Baltic Avenue (Brentford) Management Company Limited, but their appointment was delayed until the freehold was sold.
Now that Bellway is out of the site, there seems little reason why the leaseholders cannot take over control.
From Gateley solicitors to leaseholders at Baltic Avenue
We confirm that Bellway’s sale of its free interest in Rose Court, Baltic Avenue (part of Alfa Laval) which completed on 1 February 2017 is not caught by the provisions of the Landlord and Tenant Act 1987 (LTA1987) which sets out a Tenant’s Right of First Refusal, as you refer to below.
We can confirm that in particular that the sale is not caught by the requirement to serve a Section 5 Notice (pursuant to section 5 LTA 1987) on the Qualifying Tenants providing the right of first refusal and notice of its intended sale. This is because this transaction falls within the exemption set out at Section 4(2)(l) of the LTA 1987. This exemption states that where there is a disposal by a body corporate (Bellway Homes Limited in this case) to a company which has been an associated company of that body for at least two years then this is not a “relevant disposal” for the purposes of the LTA 1987.
We can also confirm that the [freehold/leasehold] legal title at [insert property description] was transferred on 1 February 2017 to an associated company of Bellway Homes Limited and that the associated company met the requirements of section 4(2)(l) and fell within the meaning of “associated company” for the purposes of the LTA 1987 generally. The associated company was then sold and became Adriatic Land 6 (GR1) Limited – your new Landlord. The disposal is not one to which Section 5 applies, given the exemption in Section 4(2)(l).
We are unable to give you any legal advice in relation to this matter.
If you would like to have the effect of the exemption within the LTA 1987 explained to you further, you will need to seek independent legal advice.
Details of your new Landlord
Adriatic Land 6 (GR1) Limited (formerly called Seaton GR SPV 5 Limited) is a company is registered in England with number 08467539. Its registered office is Asticus Building 2nd Floor, 21 Palmer Street, London, England, SW1H 0AD (https://beta.companieshouse.gov.uk/company/08467539). The new landlord is now entitled to receive the annual ground rent and insurance rent due in relation to your property in accordance with the terms of your lease. This does not in any way affect your day to day occupation and use of your own property.
Adriatic Land 6 (GR1) Limited have appointed HomeGround Management Limited to deal with the collection of ground rent going forwards and they will send you an information pack in the coming weeks (you may have already received this). Homeground maintain a web based enquiry system and can be contacted via email should you require any information from them.
Email: yournewlandlord@homegroundonline.com
You can also write to them at the following address:
PO Box 6433
London
W1A 2UZ
Yours faithfully
Gateley Plc
further, you will need to seek independent legal advice.
Details of your new Landlord
Adriatic Land 6 (GR1) Limited (formerly called Seaton GR SPV 5 Limited) is a company is registered in England with number 08467539. Its registered office is Asticus Building 2nd Floor, 21 Palmer Street, London, England, SW1H 0AD (https://beta.companieshouse.gov.uk/company/08467539). The new landlord is now entitled to receive the annual ground rent and insurance rent due in relation to your property in accordance with the terms of your lease. This does not in any way affect your day to day occupation and use of your own property.
Adriatic Land 6 (GR1) Limited have appointed HomeGround Management Limited to deal with the collection of ground rent going forwards and they will send you an information pack in the coming weeks (you may have already received this). Homeground maintain a web based enquiry system and can be contacted via email should you require any information from them.
Email: yournewlandlord@homegroundonline.com
You can also write to them at the following address:
PO Box 6433
London
W1A 2UZ
Yours faithfully
Gateley Plc
Related posts:
Bellway offers young mother freehold for £3,750. But Adriatic Land demands £12,750 … then agrees to half the sum
McCarthy and Stone says ground rents essential, but why sell freeholds to murky Adriatic Land?
Bellway fears backlash over leasehold houses may eat into profits
MP urges Commons to condemn developers selling leasehold houses with onerous ground rents. And names Taylor Wimpey, Persimmon, Bellway and Adriatic Land …
Adriatic Land now wants £54,000 for my freehold that Taylor Wimpey said would cost £6,000
Taylor Wimpey delays ground rent scandal ‘review’ to April, and hopes, like Mr Micawber, ‘something will turn up’
They are at it again !!! And are proud to boast that they have cleverly dodged the law yet again !!! Well done Bellway you must be so proud of this immoral unethical business model you follow.
Another adriatic to add to the others and another Homeground special that are impossible to contact.
Sir William Astor you are certainly expanding and profits must be up !! Congratulations
what is the plan, 50 years time, evict all the people who can’t afford massive leaseholds, then sell/ rent the properties you have acquired?…..
Yup! Why not? It’s perfectly legal. Remember leaseholders are only tenants in the eyes of the law, so change the law or suffer the consequences.
Really – only Tenants? How, when there is a Mortgage involved. Lenders do not lend to Tenants. However seeing sight recently for the 1st time a Lease that actually had the Rent Act 1977 in it did open my eyes – v – those with Town & Country Planning Acts to Law of Property Act seems a world away from Shorthold to Assured and Protected Tenancies… I’m still trying to get my head around that one.
Yes I am afraid we are tenants. The clue is the name: Landlord and Tenant act xxxx etc in case there were any delusions about home ownership take this to a tribunal, sit behind a sign thAt labels you as tenant and then listen to the judge protecting the rights of the freeholder. ( who in all lklhood wont even be therebbut would have solicitors and appointed representatives doing the dirty work.
Oh dear.. We have to think very seriously about organising a massive demonstration and delivering a signed petition to Downing st. This is the leaseholders Poll Tax!!! We must be relentless and break these ‘Rouges in brouges’. It can be done Strength in numbers.
In the North West I have been trying to find a builder that sells Freehold newbuild houses. To which I have failed to find one……………….. This speaks volumes.
The entire housing market in the future will be that of leasehold tenure. This is so worrying.
God help us in the future if we can’t sort out the present !!!
That’s just it. The situation cannot stay as it is, either it will get worse i.e. Worse conditions for leaseholders, with the freeholders and their lawyers finding ever more ways to increase what we pay in service charges, ground rent etc OR a total overhaul of the leasehold system. But who has the stomach for that?
Leaseholder, Have you joined Katie’s campaign? Strength in numbers. The Freeholders and their managing agents days of leaseholders are numbered!!! Leaseholders are finally fighting back.
Oops- “Days of ripping off ” leaseholders are numbered.
The so called “right of first refusal” http://www.legislation.gov.uk/ukpga/1987/31 has so many holes in it, that in reality it only works IF the freeholder actually wants to sell the freehold to the leaseholders. Even if the freehoder has ignored his obligations, it’s probably too expensive (for the average leaseholder) to take the matter to the courts. So not much there.
Certainly don’t bother with the Lands Tribunal – Not Fit for Purpose just like L.E.A.S.E.
Breach of right of first refusal where part 1 of the LTA 1987 (as amended by the Housing Act 1006) applies is a criminal offence and under s11 of the LTA 1987 leaseholders have the right to demand copies of the relevant contracts – both Share and Sale -in order to examine whether or not criminal breach has occurred. A simple letter from colluding solicitors does not answer this requirement.
I will post further on this over the weekend.
It may be a criminal offence but the penalties are trivial. And that’s if you can prove it. Proving it is difficult if the companies concerned are operating in a secrecy jurisdiction and disinclined to provide complete information on beneficial ownership. The UK govt, and in particular the Conservative party, are fully complicit in the machinations of the British Virgin Islands (e.g.) in facilitating this kind of behaviour. You can get a glimpse of the scale of the problem at https://www.private-eye.co.uk/registry.
Oddly enough, as documented elsewhere on this site, the constituencies most affected by exploitation of leaseholders have Conservative MPs.
Is it possible to clarify who gets the criminal offence record? The lawyers (presumably they should be struck off) or the freeholder (is it unknown directors, beneficial owners etc). To me it just looks there is no clear demarcation.
Yes you only have to the E&J lot – Resman Nominees straight to the BVI’s.
The Housing Ac t 1996 introduced criminal penalties for failing to observe the requirements of the LTA 1987.. The penalties are insignificant (e.g. £5,000 for seller failing to issue s5 notice) and do little to forestall the criminal actions of the unscrupulous few carpetbagger freeholders and solicitors who openly flaunt the regulations.
However, the LTA 1987 provides the majority leaseholders who qualify for right of first refusal with the means to ascertain the facts surrounding any disposal of their premises without their prior knowledge.
This enables the majority leaseholders to serve notice on the purchaser under section 11A of the LTA 1987 requiring the purchaser to
:
(a) serve notice providing particulars of the terms on which the original disposal was made (including the deposit and consideration required and the date on which it was made).
(b) where the original disposal consisted of entering into a contract, to provide, in addition, a copy of the contract..
An arrangement to avoid the LTA 1987 by effecting transfer of the land in the title (s) to an associated company involves three stages:
(a form the associated company
(b) transfer the land to the associated company
(c) sell the shares in the associated company (now owning the title) to the purchaser.
This is not as simple as it looks, as more often titles have registered charges shown on the Land Register, which forbid transfer of any description until such time as the financial institution holding the charge releases the charge: and this it will only do when the title purchase money has been secured.
Accordingly the documents in the transaction must be examined, as more often the seller can be found acting as an agent for the purchaser – in which event to subsequent transaction is not to an “associated company” at all.
The majority leaseholders (solicitor on their behalf) should write immediately to Atlantic (purchaser) and demand copy of all contracts as entitled by s11A LTA 1987..
At the same time, obtain copy of all entries at Land Registry {Application form, Transfer form, Charge Release form(s)}
If the purchaser (Atlantic) goes to every length to avoid handing up copy of the contract(s)- this should warn you that all may not be as Messrs Gateley would have you believe. .
Is there any angle to be had here under company law? This appears to be at odds with a lot of the other usual L&T Acts.
Where a freeholder has made a relevant disposal concerning premises (residential block of flats) to which, at the time of the disposal, part 1 of the LTA 1987 applied and the freeholder failed to issue notice under section 5 of the LTA 1987, then the majority of qualifying leaseholders have various rights given them by s11 and s12 of the LTA 1987.
s11A enables the majority leaseholders to serve notice on the purchaser requiring the purchaser to inform the qualifying leaseholders of the terms of the original disposal. (as stated in earlier posting above and to include copies of contracts).
The intention of s11A of the LTA 1987 is to enable the majority leaseholders to obtain the necessary information they require in order to ascertain whether their rights have been breached.
When the freeholder (or solicitor acting on behalf) refuses to provide this documentary information, and simply attempts to get away with an explanatory letter, then you may be sure there is more to the transaction than meets the eye.
So force the issue, as breach is and remains a criminal offence, and where a breach has occurred the majority leaseholders can force resale to themselves on identical terms to the original disposal.
Doesn’t help when the freeholder has anticipated this and has transferred to itself (from one offshore pocket to another) with an alleged premium that is a multiple of the monetised value of the ground rent.
Thanks for this piece! What I find particularly interesting is the way that the builder and the investor-Freeholder (in this case one of the Adriatics) conspire with each other to avoid having to offer the leaseholders the right to purchase the Freehold.
Also interesting in this piece is the involvement of Gateley, the massive UK law firm. They are clearly up to their eyeballs in the scam as well! In fact they enable the scam as document-processor between builder and investor-Freeholder.
We’ve had two big meetings of owners, “run” in haphazard style by the builder, with their managing agent sitting alongside, as well as one of Gateley’s solicitors. Getting at the truth about what Gateley had facilitated between the builder and the investor-Freeholder (in our case it’s Adriatic also) was like trying to get blood out of a stone! The Gateley solicitor was reluctant to give anything away. He said as little as he could. He had to prodded and prodded by us before we got him to admit what he had done between the builder and Adriatic!
Adriatic and it’s ground-rent collecting wing, Home Ground, is so obviously a money-making racket. The builders of course are delighted to sell the Freehold to Adriatic, no doubt for a good price, in addition to the income which the builder receives from the sales of all the apartments. In our case we found out that the builder sold the Freehold to Adriatic but part of the deal was that Adriatic would at the same time give all the apartments back to the builder by way of a “head-lease”. Then as long as they have certain documentation in place before 50% of the apartments are sold, the builder returns the “head-lease” back to Adriatic once all the apartments are sold and by this method Adriatic does not have to offer the Leaseholders the opportunity to purchase the Freehold. And all this is negotiated for both parties by Gateley! It’s a deliberate scheme to deprive the Leaseholders of the right to purchase the Freehold. It’s a scam.
Also involved in the scam, in our case, is the managing agent appointed by the builder. The managing agent is in on it all and while telling us that they are working in our interests, they’re actually loyal to the builder, with whom they have a contract, which we believe the managing agent probably purchased from the builder. The sooner we are able to get rid of that managing agent the better, but that’s going to be difficult too because the managing agent paid for the contract to manage these new apartments and they don’t want to let it go!
.
The government really needs to step in and pass legislation to stop all of this. We have better things to be doing with our lives than trying to assert our rights and deprive the massively wealthy builders of this country and the investor-freeholders from screwing us all.
With the danger of sounding paranoid, the freeholder-investor and the managing agent are usually in it together, to fleece the leaseholders. It’s just a fact of life. But please do prove me wrong, mr Housing Minister and dear Theresa
Eddy, the letter from Gateley actually confirms the existence of separate contracts – each dated same day 1 February. I suspect one is a Share Sale agreement and the second a Property Sale agreement. and examination will show that Bellway transferred the freehold to the “associated company” only after it had secured the purchase monies for the title from Atlantic .
There is more to this than meets the eye. Baltic House leaseholders are entitled under section 11A LTA 1987 to obtain copy of all contracts and I would urge strongly that you demand this. and examine these contracts forthwith.
A number of things need to change in respect of new build estate management including:
1. Owners having a say over who is the managing agent as early as possible
2. Agents declaring a conflict of interest as per RICS guidance at the first AGM
3. A ban on cynical attempts to circumvent section 20 qualifying long term agreements
4. A ban on cynical attempts to block the right of first refusal
5. The requirement for developers to pay service charge voids to be clearly laid out in law