… which won’t say who owns freeholds it manages
A last gasp effort to save ground rents was made by Long Harbour executive director Richard Silva in the recent issue of News on the Block.
The scandal of onerous ground rents has been driving the call for reform while “only affecting a small fraction of the UK’s four million leaseholders”.
Government’s decision on zero ground rents will end up hurting leaseholders and the property market as a whole
The leasehold system has come under an intense spotlight over the past two years with a clear consensus emerging that measured reforms are required to bring the regulations around the tenure into the 21st Century.
Even the ever-compliant Leasehold Advisory Service says 57% of leaseholders regret their decision to buy this form of property tenure.
Mr Silva calls for “robust regulation”, like the freeholders’ Pledge and code of practice – a lobbyists’ damp squib unveiled earlier in the year but given a sort-of welcome by James Brokenshire (who then decided new ground rents should be zero).
And Mr Silva is not happy about Clive Betts MP’s excellent Housing, Communities and Local Government Select Committee.
“We contributed both Written and Oral Evidence to the Committee and sadly, our experience and knowledge of this sector has not been properly heeded in the Government’s decision-making process.”
There have been some piss-takes too far, sorry: “well-thought-out proposals, including the banning of new-build leasehold houses, which we and other industry stakeholders have long supported.”
Remind me, just how long has Long Harbour been opposed to leasehold houses?
Presumably a bit after it hoovered up loads of these juicy and absurd freeholds, currently causing misery to thousands of ordinary home owners.
Worth a reminder, too, that Long Harbour demanded as much as it possibly could when victims sought to buy their freeholds, such as here:
Ground rents are right and proper, says Mr Silva, as the payola for investments in people’s homes which ensure that professional long-term custodians run the place. Or in his words:
“The Government believes that all costs associated with the management and supervision of a property, i.e. the obligations in a lease on a freeholder to serve as a responsible steward, can be wrapped up in the service charge instead. Unfortunately, this approach is incompatible with the needs of the institutional investors, predominantly pension funds, who support the current market.”
Actually, wads of Long Harbour’s freeholds are owned offshore by private equity interest and may include Hutchison Whampoa, of Hong Kong. But they are not saying, and all beneficial owners are hidden behind nominee directors.
“The alternative to this will be resident-led management groups. Professional freeholders are well resourced and provide important oversight roles in estate management, health and safety and fire risk management …”
Well, oversight, possibly, but certainly no cash.
Communities Secretaries Sajid Javid and James Brokenshire pleaded with freeholders, including Long Harbour, to pay up to remove Grenfell cladding from their buildings.
None of the ground rent speculators ever did so, although some developers have, such as Barratt.
“Removing these freeholders will remove these important functions, as resident-led groups will be not be adequately qualified or resourced to undertake them. Consequently, the banning of ground rents not only removes professional freeholders, but will essentially invite increased risk, liability and costs for leaseholders.
“Surely the payment of a reasonable ground rent in return for these valuable services, under a properly regulated regime, is a far better, safer and cheaper outcome for consumers?”
What about ground rents where no “valuable services”.
What price would Mr Silva place on the services of Martin Paine, say, or Benjamin Mire, or Israel Moskovitz / Joe Gurvits?
Here’s the example of Mr Paine:
“With the government’s proposal to wrap all costs into the service charge, there is also the potential that large fees could be channelled through this charge on an individual block-by-block basis for the acceptance of the liabilities associated with stewardship. This, without the contractual certainty offered by the lease, will lead to vastly increased costs, possibly far greater than a fixed reasonable ground rent.
“These are crucial observations which could have been covered in an impact assessment by the Government before this decision was announced, but this has not been published and the efforts of industry parties to share data and case studies to aid in this process have been ignored.”
And more …
“Leaseholders have waited long enough and deserve much better than a sweeping reform which will inadvertently lower building stewardship standards by inviting less capable freeholders to the market, increase risk and costs when resident-led groups take charge, and which could result in far more onerous circumstances when service charges skyrocket while offering less protection for residents.
“We urge the Government to rethink their ruling on zero ground rents and to work with the industry to find the right solution.”
It is hugely to the credit of politicians and officials that they saw through all this nonsense, and that Mr Silva and his friends lost the argument on ground rents.
They and their offshore private equity friends need to find somewhere else to park their cash rather than in the income streams from ordinary families’ homes.
We have invited Mr Silva and Will Astor, of Long Harbour, to discuss these issues at the APPGs, but won’t.
Openness is not what they do, on the whole.