Leasehold sector insiders were aghast at the address given by Sir Peter Bottomley on Wednesday at the Leasehold Advisory Service “annual conference”.
The event was packed with surveyors, valuers, lawyers and property managing agents paying £350 a head to attend what has until now been the most important trade show of the sector.
Earlier housing minister Gavin Barwell had said that the taxpayer-funded Leasehold Advisory Service must be “solely, and unapologetically, on leaseholders’ side”.
That was an indication to the LEASE politburo – Anthony Essien, the chief executive, and Roger Southam, the chairman – that this conference was not going to be the usual knees-up and mutual back-slapping event that the monetisers of the leasehold sector have made their own (courtesy of taxpayers).
“If I offend anybody, I’m very happy to talk with you afterwards,” Sir Peter began, “And if I fail to offend you, remind me and I’ll do it next time.”
Delay LEASE board appointments to get leaseholders represented. And stop ‘dodgy’ seminars
Sir Peter made devastating criticisms of the Leasehold Advisory Service, long a cause of concern to LKP.
“I’ve been re reading the constitution of the Leasehold Advisory Service and it says that there should be leaseholders on the board.
“There may be somebody on the board who is a leaseholder, but I don’t think they actually include someone who spends their time working for leaseholders.
“I suggest that when the Secretary of State comes to approve the latest applicants for the board that they include people who work for leaseholders.
“If not, he should delay the appointments.
“Those who do work on behalf of leaseholders should have their applications considered in full and get put forward for appointment.”
Sir Peter paid tribute to the work of the Leasehold Knowledge Partnership, and suggested that the audience (which included some of our own excellent accredited managing agents) make a donation to the organisation “to inform policy and help avoid disadvantage and stress, and promote well-being”.
Later Sir Peter referred to the LEASE conference staging seminars that encourage exploitation of leaseholders. Like this one
“It is improper for anyone to stand in front of a conference such as this and give advice to freeholders on how you can hide your profits with insurance commissions.
“It happened but I hope it never happens again.
“I hope that one of the results of the minister saying that LEASE will in future be funded properly is that LEASE will not be forced to raise money in a commercial way that leads to dodgy things happening.
“Next time LEASE has a conference I hope it will invite the people who know a good deal about it but the leaseholder representation point of view.”
He said that LKP and the Federation of Private Residents Associations, headed by his constituent Bob Smytherman, should be present.
This was warmly applauded by Shula Rich, of the Brighton and Hove Leaseholders’ Association.
“I would like to second and third what you said about the representatives of leaseholders here.
“I think I can count on the fingers of one hand the number of people here who do not earn a living out of leasehold problems.
“Yet I had to fight to get a place to come here today wihout paying for a ticket.
“I think people who work for or represent leaseholders should by right have a place at this conference without paying.”
Game-playing lawyers should do pro bono work to atone
Sir Peter began his speech with severe finger wagging at the legal profession, which so assiduously serves the freehold interest.
“This leasehold and commonhold field is not one in which I’m an expert. I wish that I were.
“I say this to those who are experts, especially experts in the law, that if any one of you has had your conscience prick you because you have represented a freeholder or a managing agent against leaseholders – and used the law to prevent justice happening – can you please give as much time to the pro bono unit of the Bar Council and help advise those who find themselves on the wrong end of the legal process, if not at the wrong end of the law.”
He then went on to discuss the retirement site Oakland Court in his Worthing West constituency where pensioners – “elderly, frail, poor leaseholders” – were systematically cheated by their freeholder.
Their attempts at obtaining justice were frustrated by appeals in a process Sir Peter described as “legal torture” in the House of Commons. The barrister Justin Bates was named in the debate.
“I say to Mr Justin Bates – if you want to see me afterwards, please do – but I hope you give as much time to the Bar Council pro bono unit as other barristers did to help resolve that case.”
Mr Bates, who was speaking in a seminar immediately afterwards, had missed Sir Peter’s speech.
“I hear that my name has been taken in vain,” he told his audience. “Perhaps I should burnish up my two nominations for the attorney general’s Bar Council pro bono awards.”
It never rains but it pours for Martin Paine
From Mr Bates, Sir Peter turned his attention to Martin Paine, the owner of Circle Residential Management, who extends short leases informally resulting in hapless buyers facing up to £8,000 a year in ground rents.
Mr Paine, who was sitting in the front row of the audience, had earlier had a conversation with Sebastian O’Kelly, trustee of LKP.
“How are you enjoying you new found celebrity?” Mr O’Kelly asked him, referring to Mr Paine being named as a “crook” in the Commons on December 20.
In a touch-and-go encounter, Mr Paine responded that “it was not quite the publicity that we were looking for”, but that it had a silver lining: “a large investment fund asked us to manage its portfolio”.
On Thursday Mr Paine featured on the Victoria Derbyshire show, apparently viewed by 2 million people, so doubtless further offers will be made.
It also feature one of Mr Paine’s victims, Luke Mosson, whose lease contained punitive ground rent terms.
Sir Peter continued:
“When people complain I gather your suggestion is that they should sue their solicitor so that the insurance company pays up. Then you offer to buy back the flat at a low price and try to remarket them with the original lease that had obviously misled the purchaser and solicitors. [Mr Paine] seemed surprised when I alerted the auctioneers to have the property withdrawn from sale.
“I believe that any kind of writing of a lease that misleads more than one solicitor is clearly an unfair term and should be struck out as unenforceable. And there should be no more ground rent payable on the property for the rest of the lease.”
Bellway: What kind of society are you trying to create?
Sir Peter’s attention then turned to the leasehold house scandal, referring to a case raised by Justin Madders, Labour MP for Ellesmere Port and Neston in the Commons on December 20.
“Why is it that young first-time buyers in a home built by Bellway should have the prospect of buying the freehold at £4,000 from the developer, who then sells it to someone else and the asking price has gone up to £12,000?
“When they get more expert advice the offer comes down to over £7,000.”
“What kind of society are we when people who are new to property law should find out that the asking price for the freehold should more than double in a year for the home that they live in?”
“Can you think of any of the reasons for having a leasehold house? None.
“What is the reason for having a leasehold on a house at all? I agree with Bob Bessell, [founder] of Retirement Security Ltd, who has to have leasehold but ensured that there is a peppercorn rent.
“You should not have a ground rent to create a secondary value involving constant payments by the owners of the lease.
“In the North-west there is a tradition of having leasehold houses and developers continued. But it needs to stop.
“Ground rents doubling every 10 years is a return of 7 per cent.
“What is the reason for ground rent going up by the equivalent of 7% for the first 50 years? None at all.
“Meanwhile the value of the lease goes down and down,
“So I say to the developers if you did sell to the original purchaser, who used your recommended solicitor, look for the effect on the capital value on the lease when they come to sell.
“This is miss-selling. When we first heard about PPI we wondered whether there was anything in it, and it turned out that there was. The same thing applies in this leasehold field.”
Stop freeholders nobbling lease extension valuations
Sir Peter reference the Mundy case, against freeholders the Wellcome trust and the Sloane Stanley Estate, where chartered surveyor James Wyatt, of Parthenia, is challenging the valuation models for lease extensions that are weighted in favour of freeholders.
This results in millions of pounds unfairly lost to leaseholders, it is argued.
Mr Wyatt is seeking leave to appeal from the Court of Appeal next month.
More here
“If the case fails I think the government should step in and ensure that there are simple graphs. It is only in very unusual circumstances that solicitors, surveyors and others have a great big argument over what the price should be.
“It is wrong for year after year to have these costs imposed in a fairly simple transaction.”
Tchenguiz and Mire, but their advisers are worse
After a brief reference to Benjamin Mire, of Trust Property Management who was removed from his judicial appointment and “against whom the RICS had a great difficulty getting their professional misconduct case taken to a satisfactory conclusion”, Sir Peter went on to discuss Charter Quay, in Kingston, and the Tchenguiz’s complex interests.
Here the head lease was bought for around £800,000, revalued at £3.2 million and then bought by the residents for £900,000.
It is the site where Martin Boyd is chairman of the residents.
Sir Peter said that these valuations were “presumably signed off by surveyors, accountants and bankers”.
“I don’t think regulated professionals should get away – whether on purpose or by mistake – with things that are wrong. It’s not for me to say what is criminal, and what is a civil tort, and what is just unacceptable behaviour.
“I am going to say that if you don’t start looking at some of these examples we won’t make the kind of progress that we ought to.”
Bad retirement resale values
Sir Peter referenced appalling retirement leasehold resale values:
“I think somebody should do a study of retirement little properties and see how the property prices on resale compared with the prices paid for them when new.”
I will be back …
“I hope to come back in five years’ time to find that commonhold is in and is working.
“I hope to find that the CMA has struck out unfair terms.
“That LEASE is prospering and that its board included people who have been working for leaseholders.”
“Disgraceful,” said one leasehold sector insider in the bar afterwards. “Peter Bottomley should be shot.”
Related posts:
LKP comment on LEASE annual conference 2012: a trade show for ‘leasehold professionals’ courtesy of taxpayers
Re-energised LEASE holds annual conference
Bottomley tells BBC R4: Clear out sector stooges from LEASE. Stop barring LKP trustees. Bring justice quickly to leasehold house owners.
Not the job of LEASE to warn ministers of leasehold houses scandal, Roger Southam tells BBC
Prisk to Bottomley: what’s the evidence that the Leasehold Advisory Service is not ‘balanced’? Well, how about this for starters …
Housing minister urges transparency over retirement exit fees
Far from being shot, Mr Bottomley should be knighted. Oh wait…
Well, what comes after that? Elevation to the House of Lords? That’ll do.
The addresses given by Sir Peter Bpttomley MP and Gavin Barwell MP,, Housing Minister,, at the LEASE annual conference represent a long overdue assault on the muddy, murky, money grubbing, and, yes, criminal world of the unregulated leasehold sector.
It believe it would be difficult to find in any other sector of the economy of this country a more unsavoury bunch of spivs, villains, gangsters and crooks all gathered under one “roof”.. Joined at the hip with their abetting law advisers, the continued existence of this wholly unregulated industry, where contempt for the law enthusiastically abounds and redress is only forthcoming,on an ad hoc “found out” basis, is the “national scandal” of which Justin Madders MP rightly speaks..
There can only be one “exit fee” for these carpetbaggers and their vagabond legal advisers (besides as appropriate:Jail) and that is a full scale and retrospective PPI style compensation scheme for the millions of unwitting leaseholders who have been and continue to be criminally fleeced at every turn, and who in many instances have had and continue to have their “homes” quite literally stolen from them underfoot through an illegal trade in freehold title portfolio sales.
As Sir Peter remarked: “It is improper for anyone to stand in front of a conference such as this and give advice to freeholders on how you can hide your” profits” (my emphasis) with insurance commissions.”
…and not just with Insurance commissions (oftentimes charged to leaseholders at three to four times the market premium), but with the full gambit of Ground Rent and other abuse.
The grinning features of Martin Paine do not require added emphasis as he seemingly continues to bask in the publicity of his activity in extending short leases “informally”, thereby willfully ignoring and abusing the statute right of each individual leaseholder to a 90 year extension on like terms to the existing lease with Ground Rent reducing to zero. His gloat to Sebastian O’Kelly that such activity had a silver lining: for as he stated “…a large Jewish investment fund asked us to manage its portfolio.”, is however of greater significance than the hapless Paine can imagine.
The Jewish community of the United Kingdom are understandably sensitive of their role in British society, It is a proud role and one rightly and jealously guarded. However, it is my view that Jewish property organisations, of the type now admitted by Martin Paine bring British Jewry into disrepute, The Board of British Deputies must intervene with its own disciplinary measures where appropriate, and at the same time confirm publicly that there can be no hiding place in British Jewry for crooks. .
Sir Peter Bottemley has go balls of steel!
Even a few days later I still laugh when I remember his speech and the effect it had on the room. I too had many of the professionals there complaining about his speech and how insulting it was to them. Sir Peter B is the man!
The sad truth of the leasehold industry is solicitors and valuers will crawl over broken glass to be able to represent a freeholder’s portfolio. If they represent a leaseholder, once the case is completed they get no more work from them as they don’t have huge portfolios, just their home. Also leaseholders won’t just pay any amount for the fees so the professionals get paid less for their efforts.
If you manage a huge portfolio for freeholders you have lots of regular work and it’s the leaseholder who pays your ‘reasonable’ fees not your client the freeholder. You can charge what you want! It’s like winning the lottery for them.
There are lots of other professionals trying to mange that same portfolio too though, it’s cut throat. Therefore to keep hold of it you have to prove to your freeholder master that you can make them more money from the leaseholders than they previously got by dreaming up other methods of extracting money and tricks no one else has thought of. If they are not aggressive or ‘creative’ enough they lose the gig and some more aggressive solicitor/valuer/barrister steps in. This is a deeply damaging state of affairs and it perpetuates this immoral world of leasehold.
It is even worse now since the Mundy decision. Freeholders are now able to take a much much more unreasonable stance for the price of the extension and with the threat of costly court action on top, for the leaseholders getting any kind of agreement on the price of the lease extension has become so much harder. Once a price is possibly agreed the professionals then pull off a master trick to ensure they get a huge amount for their fees by carrying out a move that is not legal.
They say ok we will get our client the freeholder to agree to £xxxxx but first you have to agree our legal and valuation fees which are eye watering huge! One case last week the solicitors wanted £4,400 per flat and the valuers £4,300 per flat! £8,700 a leaseholder has to pay for their freeholder’s legal fees! If you don’t agree you will have to go to Tribunal where you will have to pay for a solicitor, valuer, barrister which can be £15,000 to £20,000 per day and you could lose you case too and end up paying even more for your extension and legal fees. If you win, they will appeal and you have to pay the same amount all over again.
The law says you need need to pay your freeholder’s reasonable legal and valuation fees and if you think they are too high you can challenge them and get them reduced. There is huge case law showing these get reduced all the time, so by acting unlawfully they secure themselves big fat fees.
Why even does a leaseholder have to pay the freeholders fees as well as there own? Well, as most freeholder’s fees are tax deductible for them one can only assume they have shifted the burden of fees onto leaseholders instead of the tax coffers.
That’s why I enjoyed Sir Peter’s talk so much and the affect it had on them all afterwards.
I have not heard any mention of the Leaseholder event which took place the night before this clearly momentous conference. Why is this?
I totally agree with the comments from Paul, Alec and Louie.. What a superb speech from Sir Peter.
He spoke the truth 100%. Told “them” exactly how it currently is. No beating about the bush.. Straight to the point. Wonderful, superb. Yes, Sir Peter, you are THE man.
Again many thanks to everyone involved at LKP
Sir Peter should have been supported by a team of other MPs . . .
He should also have pointed out that :
(1) the “leaseholders” pay tax at 20% and 40% and must buy their leasehold property from earnings after tax..
(2) the freehold companies however can claim loan interest, solicitor fees and surveyor fees as their allowable expenses to offset against ground rent income . Some companies can claim loan interest expenses higher than their annual income and even found ways to operate for many years without paying any corporation tax.
(3) The Housing Minister’s Department including Senior Civil Servants, Leasehold Advisory Service and the FTT/ Courts are funded from taxes paid by the leaseholders and they all should be aware that they are not there to enhance the profits of the freehold companies. They all should be making judgement and decisions by default in favour of the 6 Million Leaseholders .
These are all good points. As a leaseholder who has recently gone through the tribunal ordeal, (it can only be described as an ordeal) – still waiting for the result since it takes the judges 6 weeks to write up the case. Before that it has taken me approximately a year to get my case to the final hearing stage, at significant expense to myself.l which is not recoverable. The freeholder/solicitors put minimal effort into all this, they have virtually nothing to loose, whilst for me it’s my home affecting my day to day life.
The system is so archaic, I have no idea why we think we live in a democracy or why English leaseholders live under the delusion that they are home owners.
Leaseholder. I wish you a successful outcome and hope you will at some point post the outcome, Name of the ‘Managing Company’ you felt you had no choice but to take to Tribunal and the reason why. It could help others.
Seeing Sir Peter Bottomley on the recent BBC article (Victoria Derbyshire) and on a number of other videoed sessions found on uTube, I can only say the man deserves a medal for the work he has done so far.
He speaks clearly and articulately and never dodges the problem.
I have a recently discovered a horrific doubling clause in my lease and it has been causing me considerable stress and anxiety. I had no idea it was there. It was never mentioned by Taylor Wimpey or the solicitor they recommended when I invested pretty much all I had into purchasing my apartment, new, from them.
Sadly, for the past few years I had been living in blissful ignorance.
I can only describe that sinking feeling…. upon after being alerted by the recent press, that my ground rent (which I always thought was very expensive at £250) actually doubles every 10 years until it reaches £8K…. as one of shock and disbelief.
I also feel so ashamed at not spotting this myself when purchasing but back in 2011 this was not in the press to any extent. I’m just a regular chap – not a legal or lease expert – but I never thought I could be so easily stitched up. It’s not a nice way to feel day in, day out.
All I knew about ground rent was it was usually a peppercorn or small fixed amount as it doesn’t actually pay for any service – it’s just a token to make a legally binding contract. When being told during an early chat with the sales team that it was set at £250 my look of suprise was met with “oh, that’s normal these days”
If the sales team had also at that point, mentioned… “Oh and by the way, in less than 10 years it will be double that, then double again, then double again, then again and again…” I think I would have ran for the hills… oh for the benefit of hindsight.
What to do next, I do not know, but knowing Sir Peter Bottomley is fighting my cause does mean no longer feel alone.
Horace
Many of us feel your despair , My case is a simlar one but ground rent on a house – we are all fighting this on many levels – fight with us join the National Leashold Campaign facebook page
Supposedly you ‘bought’ your house, but as the parliamentarians said today, ‘the system is broken’. Let’s fix it then and stop funding the lifestyle of the freeholders.
Horace, don’t despair. Join the fight back at the excellent ‘ National Leasehold Campaign’. Prepare yourself for a knock down drag out fight with victory at the end of it!
You should make sure your local MP is aware of leases with ground rent doubling every 10 years in his/her constituency and MPs have to do something to end the leasehold system.
They weren’t voted into position of MP by the freeholder companies- they were voted by the leaseholders in their constituency.
MPs salaries come from taxes paid by leaseholders at 20% and 40% rate and NOT by the freehold companies which are given allowable deductions for loan interest and so many companies don’t pay corporation tax.
There are 650 MPs in Parliament who could all vote to end the ground rent system starting in the next tax year.
“I believe that any kind of writing of a lease that misleads more than one solicitor is clearly an unfair term and should be struck out as unenforceable. And there should be no more ground rent payable on the property for the rest of the lease.”
That would be a lesson to teach those unscrupulous “clever” individuals who defraud us, though I really don’t see the many of the Conservative party supporting this in parliament. Do you?
It is my belief that the Solicitors recommended to the naive purchasers deliberately turned a blind eye to the ground rent clause in the lease. It just not credible that they missed it. A lease is hardly the ‘Gettysburg Address’ and Pretty simple to read as a lawyer! Remember, they were recommended by the developer……….