Reforming leasehold is ‘populist’, declares Mick Platt, the day-to-day manager of Wallace Estates, in an article on the policy wonk Conservative Home website, before setting off down quite a familiar path to demonstrate that existing arrangements are just fine.
This prompts two reactions at LKP.
First, the populist bit. It comes as a great surprise to us, as to get meaningful reform from this government has been like pushing a boulder uphill: it’s nice to have the Leasehold Reform (Ground Rent) Act 2022, which ends future ground rents, but it has taken 10 years.
We also got the Law Commission reports on forfeiture, enfranchisement, right to manage and commonhold reforms as well, which serve as blueprints for legislative reforms, although who knows whether the new government will care very much about them.
Given that leasehold was dumped from the last Queen’s Speech, it hardly seems to us like the government is exactly pandering to a surge of populist enthusiasm.
At the outset, ten years ago, our message was markedly unpopular at every level, with ministers and officials eager to persuade themselves that all was well with the leasehold system and that it functioned acceptably enough.
It took several scandals in retirement leasehold, outing numerous leasehold scamps and then LKP’s exposure of the doubling ground rent scandal – which subsequently gave birth to the National Leasehold Campaign – to get leasehold to the forefront of political and media attention.
So I am not sure Mr Platt is on the right lines, thinking that Conservative politicians are champing at the bit to reform leasehold – even though to do so would marry well with the party’s sole significant housing policy: to increase private home ownership (which is in generational freefall).
And while it is always diverting to hear from Mr Platt – on Newsnight over the building safety crisis with LKP’s Martin Boyd last year and at the Communities Select Committee in November 2018 – and, indeed, to hear from his equivalents, such as Richard Silva, of Adriatic Land / Long Harbour, and Bill Procter, of Vincent Tchenguiz’s Consensus Business Group, something is missing: the masters’ voice.
This is our second response to Mr Platt’s article.
Isn’t it about time leaseholders heard from the organ-grinders, rather than the monkeys: like Mr Platt’s boss East Anglia-based Italian Count Luca Rinaldo Contardo Padulli di Vighignolo, of the hedge fund Camomille Associates?
When did he think it was a great idea to invest in residential freeholds to blocks of quite modest flats in England and Wales, with their enticing and legally enforceable income streams?
Or William Waldorf Astor, of the £1.8 billion Long Harbour fund. He is heir to a viscountcy and perhaps leasehold as a semi-feudal form of land tenure has a natural allure: the surge in apartment blocks over the past 25 years offering the prospect, perhaps, of another fortune to rival that of the Mayfair and Belgravia estates of the dukes of Westminster, who pioneered the modern leasehold business model three centuries ago?
Or Hampshire vineyard-owning James Tuttiett, of E&J Capital Partners, operating out of nice offices in the shadow of Winchester cathedral? Or Essex brothers Peter and Nicholas Gould of the Pier / Regis group?
Best of all would be to hear from Vincent Tchenguiz, perhaps the most interesting and talented of the lot of them, whose fortune began in Croydon by gearing the future revenue streams of commercial and residential properties, and from whom Astor learned the, er, professional business practices of the trade.
Who has called things right, for example, over the indebted Tchenguiz freehold portfolio: Vincent, or the ex-Goldman’s smarty pants at Rothesay Life? No idea, but my tenner is on Vincent.
It would be rather more interesting to hear these figures’ views of the leasehold sector, with all due respect, than Mr Platt’s.
Mr Platt was responding to an earlier article on Conservative Home by Harry Scoffin, who is also a contributor to the Leasehold Knowledge Partnership website, who argued the Tory virtues of reforming leasehold tenure:
Harry Scoffin: Abolishing leasehold for flats can revive the Tory dream of a property-owning democracy | Conservative Home
Here’s a message for Rishi Sunak and Liz Truss: failure to expand the property-owning democracy by overcoming the ghastly cartel of developers will banish the self-styled party of homeownership to opposition. “To Conservatism… the success and the stability of a civilisation depend upon the widest possible extension amongst its citizens of the private ownership of property”.
Mr Platt did not agree:
“The Government’s plan to abolish leaseholds on apartment buildings will be a nightmare for the majority of residents and is unlikely to make the Conservative Party popular in the long-term.”
Without freeholders – even the anonymous, offshore private equity punters who have invested in the funds above – you would lose the “vital stewardship role, overseeing the maintenance, safety and sustainability of building structures and communal areas, and taking on significant responsibility for the building as a whole, such as insurance [sic] and complying with legislative requirements”.
Leaseholders would be overburdened by the responsibility, especially in complex, mixed use sites.
This ignores the fact that western Europe, Australasia and north America all have versions of commonhold where the flat owners really do own the building and the land on which it stands, and have to co-operate at least to the degree of choosing a responsible board and appointing a professional property manager.
They may be a pain in the neck – communal involvement with lots of people with different priorities often is – but these commonhold entities seem to work with less widespread acrimony than is the case with leasehold.
On the other hand, let’s concede to Mr Platt that some leaseholder controlled blocks do go badly wrong.
Some resident directors can become awful bullies; others worse.
Some form alliances with commercial interests like the property managers at the expense of the whole; some feather their own nest by managing small sites without paying the service charges.
And here is one chairman who went to prison after privately educating his children on the reserve fund:
The most egregious case of bullying that I have encountered involved leaseholder directors of a large self-managed site threatening defamation proceedings against a leaseholder who appealed in writing, temperately I thought, for an extraordinary general meeting.
It cost the individual more than £10,000, and his grovelling apology was published on the block’s notice board.
I am not aware of any of the freehold owning groups named above behaving in such a vile fashion.
I am also aware of toxic and slightly mad leaseholders lurking in the nether regions of the internet and, frankly, I would take Vincent Tchenguiz and FirstPort any day, compared with a site run by them.
Mr Platt is not making valid points of this sort, however.
His article rehashes the “research” by the PR company Sevanta that showed that commonhold flat ownership in Scotland meant blocks were ill-maintained and that Nicola Sturgeon’s long-suffering fellow countrymen were crying out for a dose of English leasehold landlordism. (De-bunked in article below)
In fact, the Scottish residential property market has long been far healthier than the English one, being mortgage driven overwhelmingly by owner-occupiers. So you don’t have so many of the baby-boomer buy-to-letters, and overseas property punters with cash – against whom England’s unfortunate first-time buyers have been in unequal competition for two decades.
Lastly, Mr Platt makes a brave effort to argue that Conservative reforms of leasehold will switch off investment and affect tax revenues.
That one takes the biscuit, given the tiresomely routine use of offshore vehicles for this sector, and the entirely parasitical, non-wealth creating nature of freehold ownership.
Related posts:
Pull the other one, Vincent! Leasehold reform hasn’t stuffed Fairhold. It was downgraded in 2015 …
Tchenguiz brothers fall out among themselves, says The Times
‘Gargantuan’ Grenfell cladding bills from Astor and Tchenguiz on sites such as New Festival Quarter, The Times reveals today
Will Astor ‘tried to nobble reform of ground rents’, Daily Mail claims
Why should Will Astor, Tchenguiz etc be paying to remove Grenfell cladding?
Greenhalgh’s farewell to APPG: ‘I have a commonhold flat and there is nothing to fear its widespread adoption to replace leasehold’
We went RTM earlier this Year, Prior to that we selected a managing agent of our choice. we agreed a twelve Month contract, and also agreed that we would only pay for goods and services received, no fee’s, commissions, handling charges, or any other improvised means of adding charges to cost headers would be allowed. The new managing agent would / will receive there fee through the professional services – management fee.
The services charge has reduced by 23%. The reserve funds have increased. We expect a further service charge reduction in 2023 / 4. I believe that the overall standard of maintenance has improved, both internally and externally at this property.
Going RTM only involves a change of managing agent, it is that simple. Most Landlords, allegedly, employ others to manage their property portfolios. A RTM can pretty much do the same thing, and in our case we did just that.
What happened to your freeholder?
The Freeholder is permitted by Law to attend RTM Company scheduled meetings. The Freeholder has one vote, and so have each Leaseholder / Shareholder. We are still responsible for paying the individual ground rent, for the time being.
I hope this answers your question.
Who were your previous managing agents?
The previous managing agent was firstport retirement property services limited.
I have recently posted this on Firstport Residents Action Group Facebook Page. LKP have written many excellent articles regarding Firstport and have often helped leaseholders on this site. I would very much like you to join the site and maybe with your expertise in RTM answer many of the questions regarding this.
Of course. I think as LKP we are already a member, but I have applied personally.
The comment above was actually meant for Stephen Burns to join FRAG as LKP are already on it. However lovely to have yourself join personally. X. Would just like to thank your group for all the advice you post regarding Firstport.
Thank you for your kind invitation, I will apply for membership of FRAG.
“It has taken ten years (to get the leashold reform act 2022)”. This is the essential point, government acts slowly, and then only with small incremental reforms. There is an enormous bias (from goverment) towards the existing system and those who benefit from the existing system – and those who benefit are not just freeholders, but all of the professionals (most prominently the legal fraternity) who make a healthy living from our leasehold system/laws. I admire the staying power of those campaigning, not just for reform, but for abolition of leasehold. Many of course have no choice but to stay the course, their whole lives are deeply affected by the moral criminality of government, freeholders, and assorted proffessionals.
Mr Platt’s main point is, I think, that having a professional freeholder at the head of things means thing are done properly and timely. I feel sure there are TENANTS out there better able than I to challenge things being done properly and timely – and at reasonable cost. But what I find interesting is this posture of Mr Platt’s, on his masters behalf, that freeholders are effectively wholly beneficial, even working for the common good. “When I was a child, I spoke as a child, I understood as a child, I thought as a child; but when I became a man, I put away childish things”, including fairy tales. Mr Platt, Sir, find another more respectable way to make a living, perhaps as a bum boy.
I have seen one or two professional Freeholders giving statements in the house of Lords.
I find the remarks they attribute to some Leaseholders to be disgracefull.
I would like to be very clear about this, many are only in that place because of who their Father was, usually going back many Centurys.
And, in my humble opinion, they could not manage a property portfolio on their own, they merely sub contract based on the best £ return.
The pompous condescending dribble certain Lords sprout beggars belief, ellegedly.
This class of the entitled, we know better than thy, is a thing of the past.
Competion is vital in any industry sector, those who are competitive win business. Those who fail do not.
Regulate this industry sector, or abolish it at the stroke of a pen.
Hear hear!
Freeholders simply see Leaseholders has cash cows, allegedly.
They are constantly looking at more ways to extract more money from Leaseholders, more often than not by “bizzare” means in this largely unregulated industry.
The RTM movement has worked extremely well for the many, to the horror of Freeholders.
I suggest Leaseholders look at their managing agents latest set of accounts at Company House. Be prepared to be astonished at the amount of debt certain MA are carrying.
Then consider this, who is paying off this debt? Is it the Freeholder? Is it the Directors of your MA? or is it you? The Leaseholder?
Most MA income is derived from the Leaseholder via the service charge, generally they have no other income streams. In effect, the Leaseholder is paying off that debt directly through your service charge, allegedly.
Going RTM costs about £50.00, per apartment, has a one off cost at the apartment block that I reside in. The best £50 I have ever spent.
If you would like value for money, have a say how your money is spent, and to be listened too, then go RTM.
If you are happy with your present MA, and the current service charge invoice, do nothing.
Freeholders provide no value added service to Leaseholders, and charge you a ground rent. Effectively money for old rope.
It is a broken wreck of an industry that only benefits the Freeholder, no completion, a closed shop, regulated effectively by no one. It reminds me of the Unions of the 80’s.
This industry desperately needs competition, and to earn its crust like all the rest in other industry sectors. This “Old Boy” network needs to be shut down, allegedly.
I have just been told that those shown below, have resigned has Directors of Drive Topco Limited with effect from 18.08.22, according to Company’s House.
I seem to recall that this firm is the parent Company of Firstport Retirement Property Services Limited.
Isabella Gabrielle Boman – Flavell, Nigel Howell, Timothy Allan Swales & Paul John Lester.
I am shocked that no one has replied to this factual, relevant up to date News article.
The Directors of the UK biggest, and allegedly best Property Managing Agent, have resi gned, apart from Mr Saleh.
For the record, I take threats of violence against my person seriously, I have notified my Brothers.
Stephen Burns
Veteran
2 Para
It had been know for many months their CEO Nigel Howell was due to retire and Mr Saleh due to take over.
The reason that things are moving quickly is that the regulatory authorities only approved the sale to the new owners last Thursday so those changes with directors are appearing on Companies House this week.
Once we understand a little more about the new owners and the impact on leaseholders we will write more.
With their recent takeovers this group is by far the largest managing agent in the country.
Dear Martin,
Thank you for that information, you are clearly well informed.
It might prove use full for the wider Leaseholder fraternity to be kept informed of possible developments in this industry sector, in a timely manner.
My comment is not intended to be critical of the LKP, simply a direct observation of unfolding events.
Firstports latest owners credentials, are freely available to all, and are common knowledge.
I have quite recently received “veiled threats” from others, who have implied violence against my person.
The reason offered or implied for those real threats was because I had made “ENEMYS BY GOING RTM – AND THEY DONT LIKE IT -WATCH YOUR BACK”
I am disgusted to the pit of my stomach by those kinds of threat, any normal person or organisation would react in the same way.
Cost of living crisis is making leasehold reform and move to Commonhold even more urgent. If anything, this will concentrate politicians, mortgage providers minds.
Appreciate a lot of other things on agenda as well – inflation and energy costs, social care, NHS waiting lists, housing generally etc but revolution is in the air, a major turning point like at the end of the 1970s.
Certain managing agents have, allegedly, absolutely no in house property management expertise.
They tend to multiple sub contract to others. This obviously means Leaseholders pay, allegedly, “way over the going rate” for all goods and services provided, that is assuming they ever receive the services they are invoiced for.
Example: We went RTM and the managing agent of our choice appointed a Warden in line with our Lease, etc. The cost of employment was 30% less than the previous managing agent charged.
How could this be? Simple, the recently employed “Warden” is self employed, so the RTM pay no VAT or employers NIC on that persons wage.
I have a substantial amount of factual, relevant up to date information, that supports my belief that RTM does benefit Leaseholders financially, including peace of mind.
I do believe that the Freeholder racket needs to be dumped in history’s rubbish bin, for once and for all.
Self-employment? Usually, the employment contract simply passes to the RTM. If your house manager opted for self-employment, then s/he is a contractor and not an employee.
RTMs can result in immediate savings from the freeholder-imposed management, but it is important not to chase to the bottom on price. If a new managing agent is offering to manage the place too cheap, they will be tempted to make up the shortfall later on.
Dear Mr O’Kelly,
We offered to “TUPE” the Warden across to the new managing agent, and even offered a small salary increase. But unfortunately the Warden chose to leave us, and now works else where.
Thank you for that sound advice, it is most welcome.
Reply to Steven Burns,
Sorry it’s not possible to reply to your post directly the system only allows a few layers of responses.
We have kept an eye of the FP group for many years not yet as complex as some but is more so than it should be. Reporting the fact that the CEO was telling people at the IRPM conference in May he was due to retire at some point this year was not a priority but understanding the corporate restructure going on is. The regulatory approval happened last Thursday so things are moving quickly. As often happens holding companies move round and it takes years to show in accounts but director changes show more quickly. Maybe keep an eye on Emeria res UK newco ltd and Emeria res Uk ltd
As far as being warned to watch your back, not nice. As I guess you know from your army background it’s often not the ones who make a noise that cause the issues. Other than house managers and sometimes property managers sometimes saying silly things we have never had a serious issue to look at -we raise issues passed to us with FP senior management and the problem seems to end very quickly.
Dear Martin,
Many thanks for your reply.
I will email your office in the near future, and outline to you how a recent Right to Manage physical handover, from one MA to another actually took place, and what did and did not occur.
When I say “physical” handover I mean the hand over of several Years worth of invoices, residents emergency contact details, details of development suppliers, combination (s) to key safe and the names and contact numbers for the Warden Call system, Fire Panel Maintenance Firm and Emergency Lighting Engineer, etc, the list is extensive.
Residential apartment blocks that use Warden Call emergency systems, have a dedicated telephone line. If for any reason that telephone line is disconnected, means the door entry system fails, the Warden Call emergency system fails, including the fire alarm.
I know the above from first hand experience, and have independent witness’s to this