The Communities Select Committee ensured that this well hidden sector of the housing market came out from under its stone. Above, Clive Betts MP, the chair
By Sebastian O’Kelly
On Monday (November 19 2018), MPs of the Communities Select Committee at last flushed out the developers and ground rent speculators who profit from turning ordinary families’ homes into long term investment assets.
A murky sector that habitually hides behinds the courts, lawyers, lobbyists and trade bodies finally had to justify its practices and, indeed, its very existence.
Up first was Jennie Daly, chief operations director for Taylor Wimpey – CEO Pete Redfern being a little shy – then came Jason Honeyman, CEO of Bellway and David Jenkinson, Group MD for Persimmon, which lost its CEO Jeffrey Fairburn over his controversial £75 million bonus (plus another c£35 million to charitee of his choice, possibly).
Mr Jenkinson, who will be the interim CEO, has not done too badly either, with a £45 million bonus, driven in part by taxpayers in the form of Help To Buy.
Missing from the developers were Redrow and Countryside Properties plc, which also dumped their customers in doubling ground rent homes.
Persimmon’s new boss spent almost £800,000 on a pub in his hometown as his first big personal purchase after receiving a £40m bonus this year. Dave Jenkinson became the housebuilder’s interim chief executive last week after former boss Jeff Fairburn was forced out amid a furore over his £75m bumper bonus.
After the developers came the freehold investors, with Richard Silva representing Long Harbour / Adriatic Land / HomeGround.
Mick Platt gave evidence for the much smaller fund Wallace Partnership Group, and John Dyer for the British Property Federation.
Housing, Communities and Local Government Committee
Nigel Glen, the CEO of ARMA (Association of Residential Managing Agents), also gave very balanced evidence on managing properties with different tenures. This will be dealt with in another article. It was a thoughtful and useful contribution.
Taylor Wimpey’s Jennie Daly was just so grateful that the Leasehold Knowledge Partnership, then the press, had ‘brought to our attention’ the issue of Taylor Wimpey selling wealth-eroding doubling ground rent properties. Otherwise, one might assume, they might have forgotten what they had done … And why, incidentally, was Ms Daly offered up, rather than the pontificating Pete Redfern, the CEO, who declaims on the housing crisis and ignores his own contribution to it?
The MPs, chaired by Clive Betts, unearthed a cornucopia of information. Terms such as “scandal” and leaseholders being “screwed” – and repeated calls for “fairness” – litter the transcript of the hearing (below).
The MPs have heard from more than 600 aggrieved leaseholders, either new home buyers cheated by plc house builders into buying properties with wealth eroding ground rents; or, leaseholders facing an array of charges and tricks to maximise revenues for freeholders.
LKP and Nationwide believe 100,000 of these new homes are unsellable with 12,000 of them having ten-year doubling ground rents: the developers class only the latter as onerous and attempted to downplay the issue.
It remains to be seen how persuasive the MPs found these PR-schooled witnesses from the sector.
First off, they were all entirely enthusiastic in their support to end leasehold houses – which they have helped spread around the country as a flawed housing stock – and scandalous leasehold practices. That is, practices that, hitherto, had served them very well indeed and about which they have been completely schtum for years.
Taylor WImpey, for example, hilariously repeated to the committee that when the doubling ground rent scandal “came to our attention” – ie was exposed by LKP in autumn 2016 – “we made a very quick decision to convert the homes that we sell to freehold”.
How about translating that “came to our attention” as:
“When we were rumbled for cheating our mainly young and naive buyers by dumping them into leases any fool in the business – but not our recommended solicitors, naturally enough – would recognise as toxic to future values.”
In fact, Taylor Wimpey was well aware that doubling ground rents were unacceptable in an article in London’s Evening Standard as far back as 2007.
After the meeting, the Chair Clive Betts formally wrote to the developers, in public correspondence. He asked Taylor Wimpey for a copy of its terms and conditions for the Ground Rent Review Scheme, about which it has been extremely secretive.
He also asked precisely how much has been paid out; how many leases have been varied; and what proportion this is to the total number of new doubling ground rents.
David Jenkinson, who currently heads Persimmon, only received a £45 million bonus, unlike his now let-go former boss Jeff Fairburn, who got £75 million. None of which is relevant, of course, to ordinary families having their leasehold homes turned into investment vehicles for murky ground rent speculators
Persimmon was asked to quantify the number of the properties it has built which, within the next years, will have onerous ground rents: ie more than 0.1% of the sale price.
Taylor Wimpey, Persimmon and Bellway were asked to explain their policies of offering the freehold for sale: whether leaseholders are notified in advance; whether they have first refusal; what constraints apply to the freeholder to whom it is sold to set a reasonable price.
The Committee also wanted to know whether senior house builders staff have any commercial connection with the ground rent buying investors. ie Owning shares in freehold owing companies that are subsequently sold on.
The chairman noted that few developers or freehold investors had reported many complaints from leaseholders about leasehold terms or the sales process. In an underlined sentence, Mr Betts said:
“This simply does not tally with the written evidence received by the committee from leaseholders.”
Adding:
“I urge you to review the written evidence we have published on our website as it pertains to your respective companies, where a significant number of submissions highlighted onerous ground rents, the failure of developer-recommended solicitors to highlight leasehold terms, and suggestions of mis-selling with regard to promises made concerning the future purchase of freeholds.”
Jason Honeyman, CEO Bellway, in car crash. Bob Blackman MP: ‘You are selling the freehold out from under them [Bellway customers] without their knowledge.” Jason Honeyman: “Yes, we are.”Here are some highlights from the Select Committee
1/ Developers selling on freeholds to speculators rather than offering them to their own customers was described as a “scandal”.
Bob Blackman MP: “Why is it, then, that your company [Bellway] has this policy where you sell it [the freehold to a house] off to a third party and not offer it to the individual leaseholders at the time you are offering the sale?”
Jason Honeyman, CEO Bellway: “It is how we have always operated as a business. I am sure that is not the answer you want.”
Bob Blackman: “I am asking why your customers do not get the chance to exercise the opportunity to buy their freehold. You are selling the freehold out from under them without their knowledge.”
Jason Honeyman: “Yes, we are.”
Bob Blackman:
“I would regard that as being, quite frankly, a scandal. You are not offering the opportunity for people to buy the property in which they live and have invested a large amount of money.
“They are suddenly told it is going to be managed by a new freeholder, without having that opportunity. My personal view is that your company should review what you do in terms of business practice.”
2/ Long Harbour claims it has revenues of only £4 million on its £1.4 billion ground rent fund, with £340,000 in profit. Its sister company HomeGround collects £32 million a year in ground rent.
Its claim that its clients are UK pension funds investing in residential freeholds was not challenged.
No question addressed the hidden beneficial ownership behind nominee directors. And the fact that some freeholds are owned offshore via entities such as Abacus Land 4 Limited.
3/ Both Long Harbour and the Wallace Partnership Group has a similar funding model: the ground rents go to the investor (all blameless UK pension funds, it appears) with the more controversial permission fees remunerating Long Harbour and Wallace.
Mick Platt, of Wallace ground rents, heads a fund, like Long Harbour, where its profits come not from ground rents, which are go to investors, but from reaping every conceivable consent fee … Is this a business with a future?
Mick Platt [Wallace] told the committee: “Our entire operation is covered, as Richard [Silva, Long Harbour] just alluded to, by consent fees and permission fees.”
This means, in less scrupulous hands obviously, that the more aggressive and punctilious the freeholder is, the more fees he will earn. So you are in the territory of the Conveyancing Association deploring the games and charges involved – it urges criminal sanction – when leasehold properties are sold on.
4/ Taylor Wimpey has spent £33 million of its £130 million ground rent review scheme to compensate freehold owners to make doubling ground rents rise with RPI only. This is three times more than the £11 million revealed in the accounts in the summer.
Taylor Wimpey told the select committee that it had completed 2,200 deeds of variation.
5/ Taylor Wimpey’s ground rent offer to ripped-off customers closes down future litigation – say, concerning mis-selling – although Taylor Wimpey says the opposite:
Jennie Daly, Taylor Wimpey: “It in no way prohibits or would prevent any customer from seeking legal remedy on any other matter to do with their lease or, indeed, from third parties. I am quite happy to provide the Committee with a copy of the settlement agreement.”
Yes, please. LKP would like to see the settlement agreement and has repeatedly called for transparency in this review scheme.
6/ 3-5% of owners of ex-Taylor Wimpey freeholds are not co-operating with its ground rent review scheme, although with 2% the company is “active negotiation”.
LKP has frequently asked: why should freeholders, who are no slouches at charging an old lady a £70 consent to keep a cat in her flat, going to help extricate Taylor Wimpey from this mess without making it pay?
7/ Persimmon stopped selling freeholds in 2014 after freehold owners abused “event charges”, which is another word for the permission fees that fund Long Harbour and Wallace.
David Jenkinson [Persimmon]: “We identified a problem mainly with event charges back in 2014, and the company made the decision to not dispose of any ground rents to any third party. We have not made any disposals since 2014. We held them within the business, to ensure our customers got treated fairly to do with them.”
8/ Bellway does not consider that it has any onerous leases.
Jason Honeyman [Bellway]: “We do not have any onerous leases, so we have not had the level of complaint that Taylor Wimpey has. We just do not have that volume of complaints coming through our business.”
9/ How much should the freehold of a house cost?
Jason Honeyman [Bellway]: “If you were to come into a home in Newcastle, say, and you
wanted to buy a home of around 1,000 square feet, you could buy that at £196,000 on a leasehold basis. If you wanted to acquire the freehold it would cost you around £200,000. That is the sort of difference.”
David Jenkinson [Persimmon]: “We looked at the price at the time, increased the price of the freehold units by about £2,000 to £3,000 per unit, and did not sell any more leasehold ones on that site.”
In fact, at Harrow View West Persimmon has been selling houses freehold for £50,000 less than the leasehold houses that were sold before this gig turned sour.
10/ Taylor Wimpey sold about 2.7% of its leasehold houses under right to buy
11/ Bellway sold around 4,000 leasehold houses over six years, before ceasing the sales in summer 2017.
Tanmanjeet Singh Dhesi MP, was struck by house builders reporting few complaints, while the Select Committee had been deluged
12/ Bellway cannot understand what the fuss is about.
Jason Honeyman: “Similar to Dave, we do not experience the level of complaints that I sometimes read in the press.”
Tanmanjeet Singh Dhesi MP:
“Let me reassure you that we have experienced lots and lots of complaints in the evidence sessions, so somewhere along the line our things are not quite corroborating.”
13/ House builders said that the government suggestion to introduce £10 ground rents would devalue freeholds and you wouldn’t attract the estimable long-term stewards of a building that you have at present. That seemed to be the message.
14/ Ground rent reform would not affect house building numbers in the slightest.
Mark Prisk MP: “Would it affect the housebuilding numbers? Would you build fewer?”
Jason Honeyman [Bellway]: “Would I build fewer? No, I do not think so.”
Jennie Daly [Taylor Wimpey]: “I would agree that the level of income from the sale of freeholds is relatively small against our main business of selling homes … “
Mr Prisk: “What about Persimmon?”
David Jenkinson [Persimmon]: “I have no problem at all with the £10. A lot of the things that Jason was talking about could be dealt with through a management company anyway. As for the effect on production, it would not have any impact at all.”
15/ Bellway accepts that freeholds add only £3-4,000 to a property’s price, but once sold to a freehold investor he can demand £50,000 off the leaseholder.
Bob Blackman MP: “You sell the leasehold, you sell off the freeholds to someone else, and then the freeholder comes and says, “No, we are not prepared to sell the freehold to you”, or, “You can buy the freehold. It has now gone up to £50,000”, instead of, as you said at the beginning of your evidence, maybe £3,000 or £4,000 difference.”
Jason Honeyman: “Yes.”
Bob Blackman: “Yes, that is the position.”
Jason Honeyman: “Yes.”
16/ Bellway considers Adriatic Land an “institutional blue chip investment company”, even though it hides its beneficial ownership and is often based offshore.
17/ Bellway’s lame justification of leasehold houses.
Kevin Hollinrake MP, asked why ground rents on leasehold houses should increase, apart from giving house builders and ground rent investors more profit
Kevin Hollinrake: “There is a difference between leasehold houses and apartments in terms of the stewardship. I accept that. On leasehold houses, there is no justification for a ground rent to increase, is there, other than a profit opportunity for you?”
Jason Honeyman [Bellway]: “In my limited understanding of it, if you have a long-term interest in the property that has a 10-year rent review based on RPI, it is perfectly acceptable.”
Kevin Hollinrake: “To whom?”
Jason Honeyman: “To the lenders, to the purchasers and for marketability.”
Kevin Hollinrake: “We are talking about not just the lenders here. We are talking about the people who live in the houses and own them.”
18/ Mary Robinson MP asked where there existed “rather cosy relationship between developers, solicitors, conveyancers, mortgage brokers, which could be termed a commercial relationship, with intimation that there were referral fees being paid in exchange for introductions etc”
Jennie Daly [Taylor Wimpey]: “… A solicitor is required to act independently on behalf of their client, whether or not they were identified as part of a panel of solicitors. To assist customers, Taylor Wimpey does, as do many of our competitors, identify solicitors who are familiar with the development, operate locally and are familiar with new home sales. It is entirely a matter for the customer to decide who they wish to use …”
Jason Honeyman [Bellway]:
“There are no commercial relationships between Bellway and any solicitor. We have never received any referral fees.”
19/ Leaseholders knew what they were buying, sort of. Says Persimmon’s generously remunerated Group MD:
David Jenkinson [Persimmon]:
“The evidence you received is strange compared to our experience. … There is no way the solicitor would not tell them that it was a leasehold property and explain the ground rent … I am not sure what more we can do. I just cannot reconcile the information you are being told with how they would not know. They may not fully understand the implications of it, but they must have known it was leasehold.”
20/ Persimmon tells Select Committee chair Clive Betts that Persimmon uses a panel of solicitors for the benefit of leaseholders.
David Jenkinson [Persimmon]: “Can I just explain? The real reason Persimmon uses a panel of solicitors is to save the customer money because they only need to review the title once. If you go each individual time, the biggest part of actual cost from a sale is to review the title.”
Chair [Clive Betts]: “You are saying, “That is the solicitor to go to because they will do it more cheaply for you”.
David Jenkinson: “No, they will save them the cost of doing the title.”
Chair [Clive Betts]: “I think there is something you need to look at there. It may well be we pick it up with the Law Society as well.”
21/ Not another PPI scandal, says Taylor Wimpey
Jennie Daly [Taylor Wimpey]: “I would not agree with that characterisation …”
Jason Honeyman: “… I do not believe we have mis-sold. All our leases are perfectly marketable and I do not have the problem Jennie has. I do not believe there is a compensation issue or a mis-selling position there.”
David Jenkinson:
“… My position is the same as Jason’s. We have had about 15 customers write to us reckoning they could not get a mortgage for the house.”
21/ Bellway only now selling leasehold houses at Barking Riverside in London, where Greater London Authority is retaining the land.
22/ Fleecehold, the new investment vehicle of managed estates, was also addressed:
Kevin Hollinrake: “They [local authorities] are granting planning permission on the cheap … We need some more regulation in this area, basically.
David Jenkinson [Persimmon]: “I would not disagree at all.”
22/ Leaseholders want an end to leasehold.
Tanmanjeet Singh Dhesi:
“With respect to the various round table events and evidence sessions we have had, we had the round table event last month with leaseholders. I can confirm the loudest applause we had was when participants called for an abolition of leasehold.”
23/ Long Harbour does not condone leasehold house or onerous ground rents, so why has it bought so many freeholds to them?
Richard Silva [Long Harbour]: “For the record, we absolutely agree with the Government’s direction of travel in banning leasehold houses going forward. We completely agree with the elimination of onerous ground rents.”
24/ Freeholders lend money to leaseholders as responsible long term custodians of the building, claims the British Property Federation.
John Dyer, of Savills and the British Property Federation, speaking up for things to remain just as they are, thank you. Apparently, he thinks freeholders selflessly contribute loans to leaseholders because they are the long-term custodians of a building. There is a word for that. And it is bollocks.
John Dyer [BPF]:
“… A lot of freeholders quite regularly lend money to the service charge. There is no interest charged on that. It is just a fund to make sure services can be provided …”
Any examples? LKP is aware of offshore Abacus Land 4 Limited, part of Long Harbour, lending to Heysmoor Heights, which has Grenfell cladding, to pay for fire marshals.
But that was to cover its obligations to keep the building safe and avoid prosecution, not an act of patriarchal stewardship for the benefit of anyone else.
It also obtained a tribunal ruling to make sure the leaseholders eventually pay up, for fire marshals and cladding removal. This will wipe some families out.
25/ Commonhold? Leasehold works fine for most, says freehold investment fund manager.
Mick Platt [Wallace]: “I do not think there is any perfect tenure of ownership. Commonhold has its own advantages and it presents its own set of challenges.
“The leasehold system does that as well, but the leasehold system works very well for the large majority of leaseholders … (It) is possibly preferable to going with something that is not widely understood or is new.”
26/ Wallace has fewer than 400 10- or 15-year doubling ground rent freeholds.
27/ Long Harbour has 4,165 onerous leases, where the ground rent doubles at 10 or 15 years.
28/ Long Harbour has 1,807 Taylor Wimpey doubling ground rents (presumably including a few of those leasehold houses it does not approve of). 911 of these leases have converted to RPI.
29/ Long Harbour says £200 is the average ground rent across the portfolio of 160,000 freeholds. This ground rents bring in £32 million a year in ground rents to blameless UK pension funds.
Richard Silva, of Long Harbour / HomeGround / Adriatic Land / Abacus Land etc … Here we have a £1.4 billion ground rent fund where the management turns over £4 million and makes a profit of just £340,000.
30/ British Property Federation rejects £10 ground rent proposed by government.
John Dyer [BPF]: “The cost of collecting that is more than the £10. You might as well go to a peppercorn.”
31/ Long Harbour accepts commonhold for “appropriate sized developments”.
Richard Silva [Long Harbour]: “… leasehold system needs to be brought into the modern era … We have also mentioned we think there is space for a reinvigoration of commonhold for what I would call appropriate-sized developments. That all gives consumer choice.
“If you cap a ground rent at £10 going forward, there is no economic incentive for us to invest in the various teams of professionals who work in our business, undertaking the stewardship role …
“As a general point, commonhold can work. It is most effective where there are small, mainly owner-occupied-led developments.
“In our portfolio, we directly manage 83,000 leaseholds. Over 40% of our leaseholds are owned by investors. They do not live in the blocks. They are not owner-occupiers. Frankly, they are quite comfortable with an independent freeholder looking after their investment and making sure the block runs harmoniously.
32/ Is £2,500 a justifiable permission fee for a conservatory?
Mick Platt [Wallace]: “No, it is not right.”
Teresa Pearce MP: “Is there a justification for permission fees?”
Mick Platt:
“There is a justification for charging a fair fee where we provide a service. The lease is a legal document at the end of the day, and, to the extent that we have to do work to provide a service, we would charge a reasonable fee to cover our costs.”
33/ Permission fees pay for both Long Harbour and Wallace (and the Tchenguiz Family Trust)
Clive Betts, Chair: “Mr Platt, how much of your £11 million do you actually make on the ground rents?”
Mick Platt [Wallace]: “As I said, our £11 million goes to pay the pension funds.
Clive Betts: “How much do you make then, as a company?”
Mick Platt [Wallace]:
“Our entire operation is covered, as Richard [Silva, Long Harbour] just alluded to, by consent fees and permission fees …”
With Rothsay Life having a debenture on the ground rent income of the Tchenguiz Family Trust portfolio, the same permission fees are its sole source of income from the freeholds.
34/ Long Harbour doubts leaseholders are trapped in unsellable homes.
Richard Silva [Long Harbour]: “We hear in the media and some of the engagements we participate in about a number of 100,000 people trapped in unsellable, un-mortgageable homes.
“… We have done a lot of analysis on our specific portfolio … we directly manage 83,000 leaseholds. We compared this year and last year with the amount of property transfers that we were required to do or the amount of notices of mortgage that we were required to do, and the volumes are the same.
“We have had 157 people write in to us to say, “Please can you vary the terms of my lease, because I am struggling to sell my house or remortgage it?” The significant vast majority of those are where there is a 10-yearly doubling provision in the lease.”
Thank you to all the MPs who questioned these developers. It was interesting to see what the developers had to say about it all. I look forward to the day we get our true freeholds back. This truly is the PPI scandal of the housing industry!
This posting and the other recent posting would be good put together and widened to Retirement Leasehold Flats and to highlight the beginning of this problem circa 1980s when McCarthy & Stone began this Leasehold selling.
McCarthy & Stone began to Design & Build Residential Retirement Developments and found a local Estate Agent called Peverel, who began in 1982 in Bournemouth and were later in circa 199o under scrutiny by Leasehold Residents for excessive Service Charges and Management Fees. So in 1992 Peverel were sold for £30 million in a Management Buyout but retained the services of Peverel until 2014/15.
A sister company Fairhold now using Estates & Management as an Agent, was set up to purchase the Freeholds so leaseholders could not purchase the Freehold from the Developer for the then £2k to £3k. Instead the new Freeholder could charge what they could get away with. The Managing Agent could extend the lease but not the 90 years available from the Freeholder, another Cash Cow for the MA, as they could extend the lease to the same as they themselves had purchased say 125 years, they could provide an extension but charge 3/4 times more than the original Freehold should have cost.
Now after nearly 40 years the methods used by these companies have been honed and polished to where today they are now embedded in Custom & Practice by the Leasehold Industry and House Builders have copied the Leasehold for Houses.
I noted it was stated the House Leasehold Sales were traditionally in the North East yet sites can be found in the Midlands Area such as Shropshire and Wolverhampton?
ollie
I am glad to see Bob Blackman MP ( Harrow East ) is a member of the Communities Select Committee .
The Blocks of flats at Knowles Court in Gayton Road Harrow and Chalfont Court and Garth Court in Northwick Park Road , Harrow were built by Bellway Homes in 1993-4 . Bellway Homes sold the freeholds of these blocks to Cherrybase Properties Ltd ( member of Wallace Estates ) in April 1995 without offer of RFR. The 1993 Housing Act required the buyer to offer the freehold title to the leaseholders on the same terms but Cherrybase has NEVER made this RFR offer to the leaseholders The 1996 Housing Act confirmed the penalty is a criminal offence cat 4 ( which is £2500 ) which is nothing more than a flea bite to City Business men who are used to dealing in £Mil transactions.
The managing agent for Cherrybase is “Simarc” which Barry Gardiner MP ( Brent North ) identified in in Feb 2002 in debate in Parliament , to be a ground rent grazer. Ground rent grazing was explained by Barry Gardiner as a business model based on investing for the recovery charges claimed from leaseholders in ground rent arrears and not investing for the ground rent income. In many leases , the wording said the ground rent was due whether “demanded or not”. Some leaseholders in the blocks never got the ground rent demand or if they did and a cheque was sent to Simarc , the cheque was not presented to the bank . Later they would get a nasty letter demanding over £200 -£300 for admin charges for recovery of arrears of ground rent which were created by Simarc. This “ground rent game” was played by Simarc together Glen Stevensons ( solicitor) who got fined £25,00o by the Law Society around 1999 or 2000.
Barry Gardiner MP is member of the APPG and he can confirm what he said in 2002 in Parliament about Simarc and E&M. He can confirm these managing agents were ground rent grazing and some times even threatened the mortgage lenders with forfeiture of lease.
Emma Hynes
So Jason Honeyman doesn’t consider Bellway’s increasing by RPI every 10 years onerous. What about the first increase after 10 years and then every 5 years? Does he not know that’s the standard Bellway lease?
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Questions for MPs to ask Taylor Wimpey and Long Harbour today …
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Thank you to all the MPs who questioned these developers. It was interesting to see what the developers had to say about it all. I look forward to the day we get our true freeholds back. This truly is the PPI scandal of the housing industry!
Again excellent posting.
This posting and the other recent posting would be good put together and widened to Retirement Leasehold Flats and to highlight the beginning of this problem circa 1980s when McCarthy & Stone began this Leasehold selling.
McCarthy & Stone began to Design & Build Residential Retirement Developments and found a local Estate Agent called Peverel, who began in 1982 in Bournemouth and were later in circa 199o under scrutiny by Leasehold Residents for excessive Service Charges and Management Fees. So in 1992 Peverel were sold for £30 million in a Management Buyout but retained the services of Peverel until 2014/15.
A sister company Fairhold now using Estates & Management as an Agent, was set up to purchase the Freeholds so leaseholders could not purchase the Freehold from the Developer for the then £2k to £3k. Instead the new Freeholder could charge what they could get away with. The Managing Agent could extend the lease but not the 90 years available from the Freeholder, another Cash Cow for the MA, as they could extend the lease to the same as they themselves had purchased say 125 years, they could provide an extension but charge 3/4 times more than the original Freehold should have cost.
Now after nearly 40 years the methods used by these companies have been honed and polished to where today they are now embedded in Custom & Practice by the Leasehold Industry and House Builders have copied the Leasehold for Houses.
I noted it was stated the House Leasehold Sales were traditionally in the North East yet sites can be found in the Midlands Area such as Shropshire and Wolverhampton?
I am glad to see Bob Blackman MP ( Harrow East ) is a member of the Communities Select Committee .
The Blocks of flats at Knowles Court in Gayton Road Harrow and Chalfont Court and Garth Court in Northwick Park Road , Harrow were built by Bellway Homes in 1993-4 . Bellway Homes sold the freeholds of these blocks to Cherrybase Properties Ltd ( member of Wallace Estates ) in April 1995 without offer of RFR. The 1993 Housing Act required the buyer to offer the freehold title to the leaseholders on the same terms but Cherrybase has NEVER made this RFR offer to the leaseholders The 1996 Housing Act confirmed the penalty is a criminal offence cat 4 ( which is £2500 ) which is nothing more than a flea bite to City Business men who are used to dealing in £Mil transactions.
The managing agent for Cherrybase is “Simarc” which Barry Gardiner MP ( Brent North ) identified in in Feb 2002 in debate in Parliament , to be a ground rent grazer. Ground rent grazing was explained by Barry Gardiner as a business model based on investing for the recovery charges claimed from leaseholders in ground rent arrears and not investing for the ground rent income. In many leases , the wording said the ground rent was due whether “demanded or not”. Some leaseholders in the blocks never got the ground rent demand or if they did and a cheque was sent to Simarc , the cheque was not presented to the bank . Later they would get a nasty letter demanding over £200 -£300 for admin charges for recovery of arrears of ground rent which were created by Simarc. This “ground rent game” was played by Simarc together Glen Stevensons ( solicitor) who got fined £25,00o by the Law Society around 1999 or 2000.
Barry Gardiner MP is member of the APPG and he can confirm what he said in 2002 in Parliament about Simarc and E&M. He can confirm these managing agents were ground rent grazing and some times even threatened the mortgage lenders with forfeiture of lease.
So Jason Honeyman doesn’t consider Bellway’s increasing by RPI every 10 years onerous. What about the first increase after 10 years and then every 5 years? Does he not know that’s the standard Bellway lease?