The Commons debate on leasehold reform took place after the intervention of LKP patrons Jim Fitzpatrick and Sir Peter Bottomley.
The debate can be seen here: http://www.parliamentlive.tv/Event/Index/fc53bd87-8abf-4986-b7ce-6a7a488b8cfc
The debate can be read here: https://hansard.parliament.uk/commons/2016-12-20/debates/4F15110B-F6D5-4FA1-9154-536BD848130E/LeaseholdAndCommonholdReform
The catalyst was the scandal of Taylor Wimpey selling homes between 2007-2011 with doubling ground rents and then selling the freeholds off to the usual shadowy, monetising enthusiasts, such as E and J Capital Partners, which was named in the debate.
This was initiated by the Leasehold Knowledge Partnership, which was named 12 times during the debate by different MPs and the housing minister. Patrick Collinson, the Money Editor of the Guardian took up the issue and stuck with it over a series of articles.
LKP wishes him a very Happy Christmas, and here is his report of the Commons debate
Taylor Wimpey has now undertaken to cease building leasehold houses, and the New Year will begin with scrutiny of the leasehold monetising enthusiasms of the other housebuilders such as Bellway, Redrow and Persimmon, whose leasehold houses are found all over the country.
That the purchase of many of these properties with onerous ground rents are assisted by the Help To Buy scheme was a point not lost on the Commons.
Justin Madders (Labour, Ellesmere Port and Neston) made a superb, detailed and authoritative speech on this topic, naming Taylor Wimpey, Bellway and Redrow.
There was little evidence of the usual housebuilders lobbying at the speech, with even the housing minister being sharply critical.
Jim Fitzpatrick brilliantly outlined the bullying to which leaseholders are subject to by “billionaire” John Christodoulou and his lawyer David Marsden at Canary Riverside, in his London Docklands constituency, who were both named.
Sir Peter Bottomley fulfilled his promise to name leasehold gameplayers: Martin Paine was described as a “crook”; Benjamin Mire was said to be unfit to be a member of RICS; Roger Southam, the chairman of LEASE was also named.
He referenced the Mundy court case challenging the freeholder-dominated valuation system for short leases. Chartered surveyor James Wyatt, of Parthenia Valuations, is taking this to the Court of Appeal in the summer. Sir Peter suggested a government impartial valuation model, untainted by commercial interests.
Oliver Colvile (Conservative, Plymouth Sutton & Devonport) discussed the right to manage frustrations of Elim Court, where pensioners face a Court of Appeal showdown, and Regent Court, where pensioners had to pay £140,000 for an uninsured roof.
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Congratulations to all those MP’s. I hope the Minister comes back with some constructive proposals.
As a former Taylor Woodrow lifelong employee I was saddened to see that Taylor Wimpey had been so heavily involved in some of these practises although they are not the only ones.
They have made a start by stopping that shocking policy of doubling ground rents in 2011 and will now cease selling Leasehold houses from 1 Jan 2017. They are also meeting those of their customers who are unable to sell their properties, I hope with a view to compensating them fairly.
They state that this is only a small number. I think there will be more than they expect.
TW also say they were unaware of this ground rent problem until a few weeks ago.
It appears that many of the current Board of Directors are recent appointments and no-one ever told them.
If one types “problems with Taylor Wimpey ground rents” on Google they will all appear from 2007 up to current date. Numerous accounts of problems.
In 2007 there is a statement from David Hughes Taylor Wimpey Head of Sales and Marketing in which he tries to justify the doubling of ground rent every 10 years.
In 2011 there is a letter from Taylor Wimpey to a customer who pleaded that his ground rent be doubled every 25 years instead of every 10 years.
TW replied as follows. “I cannot agree to this amendment, it would not appear to be logical in any event. The ground rent under the lease doubles from £250 every ten years until the fiftieth anniversary of the term. These provisions are stated in all our development leases and you cannot expect an exception to be made on your part”
How ridiculous this statement sounds now, and what a terrible communication system TW must have for the current Board of Directors to have no knowledge of these events.
Well done to Sebastian and Martin and their supporters in parliament. Recognition of the injustices and anomalies around leasehold, and of the appalling behaviour of some ostensibly respectable people, has grown thanks to their tireless work.
It’s not so long since housing minister Grant Shapps assured us all that there was nothing to see here. He was of course, David Cameron’s fund raiser. The Tchenguiz interests were six figure donors back in the day when fleecing leaseholders via conflicts of interest and rigged deals was even easier. There was no LKP or Campaign against retirement leasehold exploitation. What a transformation they have achieved in awareness of the issues. We need LEGISLATION.
As desirable as it is to see some home truths (appropriately), the larger story is worse. The tendency of some to settle quietly, with non-disclosure agreements, was good for them and bad for everybody else. The debate exposes the tip of an iceberg.
Yes well done LKP! This is a great achievement and let’s hope Mr. Barwell comes back with some solid reforms next year!
There was a lot of ground to cover andCommonhold was only referred to briefly, and only to say “it doesn’t work”. I wish there had been more discussion about what exactly the problems are. Most leaseholders trying to obtain justice would say that leasehold “doesn’t work ‘either. But we’re stuck with it!
Clearly developers won’t embrace Commonhold because it provides fewer opportunities for exploitation. We can say it “doesn’t work ” for the crooks and scammers, but is that the only problem with it?
Is there any reason why councils can’t set it as requirement? For instance when Sadiq Khan starts his affordable homes, could he not set as a condition of planning permission, that the tenure is commonhold? That would set a great precedent, and if successful, make it a more familiar and trusted form of tenure.
Wish full thinking, Gerri
Plans are being made for Transport for London to release some of their substantial land bank to build “affordable” homes.
Crucially, these homes will be sold on a leasehold basis, with revenues generated being used to finance TFL.
There was no mention in the debate of how difficult it can be for many leaseholders to bring a case to the First Tier Property Tribunal. I know because I did it myself but found no real assistance in preparing the statement of case before a two-day Hearing. In my opinion the existing adversarial system should be replaced by a Leasehold Ombudsman, similar to the Financial Ombudsman, which is more user-friendly to lay members of the public:
http://www.financial-ombudsman.org.uk/consumer/complaints.htm
If a leaseholder with a grievance could register a complaint and get assistance from a case officer leading to a decision, many more legitimate complaints would enter the system than at present. Please would you write to your MP to ask the Housing Minister to consider appointing a Leasehold Ombudsman.
Peter Bottomley mentioned it. He recalled it was originally intended to be a mediation rather than the adversial system it’s become. I agree an ombudsman regulator along the lines of the FCA would be much better.
I find it incredible there are no sanctions for repeat offences! Even when a managing agent is proven incompetent – or worse – they can carry on in business, They can commit the same offences against other leaseholders and the tribunal seems to give them nothing more than a slapped wrist!
Unfortunately no regulator would have the power needed to act in a case of a serial offender.
Just as an example. Suppose the law was changed so that every property management company had to be a member of ARMA and had to comply with ARMA guidelines otherwise they could not trade as a property management company?
And let us say the property management company are serial offenders against the guidelines(perhaps lack of accounts, charging for work not done, charging the wrong development, directing funds meant for development accounts to another company, price fixing or even instructing a property manager to dispose of development expense files in a skip) and ARMA expell them?
That means the property management company is out of business as they should be.
But, do you believe the property management company or their backers would just accept the decision? Of course they wouldn’t! However well intentioned, do you think ARMA(with a net worth of around 1m would have the resources to stand up to the battery of expensive lawyers that the property management company could deploy?
If not ARMA, suppose it was a government supported ombudsman?
Are the government going to allow the collapse of a property management company and the losses flowing from that to the financial institutions? I think not!