First step for major leasehold reforms: Martin Boyd appointed chair of Leasehold Advisory Service

By Sebastian O’Kelly

The announcement today that Martin Boyd, chair of LKP, is to become the chair of the government quango the Leasehold Advisory Service (LEASE) is of huge importance: to 5 million flat owners and the property sector generally.

The appointment means that inclusion of substantive leasehold reforms in the King’s Speech on November 7 is inevitable. These have been urged by housing secretary Michael Gove, and there were some leaks in The Sunday Times over the weekend.

The appointment means that someone with a highly critical agenda now has a permanent seat to influence the direction of leasehold reform. In an expansion of the role, he is also tasked with informing government, including the Welsh government, of all concerns facing leaseholders.

The choice of Mr Boyd as LEASE chair is extremely bad news to private equity offshore investors who have hoovered up residential freeholds to blocks of flats, elbowing out pension funds over the past two decades. They have been lobbying hard against reforms via their representative body the Residential Freehold Association.

Major housebuilders, too, are going to have to pay close attention, as they have been dithering over the legal structures of new blocks of flats ever since the lucrative ground rent racket came to an end last year with the Leasehold Reform (Ground Rents) Act 2022.

Now that the one and only legitimate income stream in leasehold is knocked out, do plc housebuilders really want to risk their already tattered reputations selling freeholds to blocks of flats, where the only money to be made is padding the service charges, gaming insurance commissions (presently under examination by the Financial Conduct Authority), and charging an assortment of permission fees ranging from subletting to keeping a cat (typically £80)?

Leasehold is a multi-billion pound sector, which at base has cheating investment income streams squirelled away in the homes of other people – homes which taxpayers have subsidised to the tune of billions to get first-timers to buy.

With Labour, if anything, even more eager to impose reforms than the government, it is looking like the leasehold game is up at last.

Mr Boyd will remain as my chair at the campaigning charity the Leasehold Knowledge Partnership: he would only accept the new role on this condition. And unlike his quangocrat predecessors, he has insisted on not being remunerated, either.

As well as being a stalwart of LKP, Mr Boyd is chair of Charter Quay, a 260-flat site at Kingston bridge in Surrey which includes river frontage, restaurants, cafes and the acclaimed Rose Theatre. Worth around £350 million, Charter Quay is the most valuable enfranchised site in the country which is actually owned by the leaseholders.

With the direction of reform favouring the adoption of commonhold, Charter Quay is an example of a complicated, high-end, mixed-use site that is already very nearly using that form of tenure.

England and Wales are the only countries in the world that sell flats as long tenancies, with all the vulnerabilities in law that a tenancy involves. Commonhold means the flat owners jointly own the building and the land on which it stands, and have a legal entity, controlled by them, to manage the place.

Of course, the intricacies of leasehold – especially in complex, highly engineered multi-use blocks – are beyond the capacity of most leaseholders, who just want to live in a flat for a while, have jobs and other concerns to worry about.

In a succession of court cases, Mr Boyd established that the service charges at Charter Quay were excessive, winning back more than £500,000, and then he succeeded in removing altogether the management of the site from the freeholder, ultimately the then very powerful tycoon Vincent Tchenguiz.

Charter Quay was placed in the hands of a court-appointed manager, meaning the management was answerable to a court. After two years, and using a legal loophole which is now less achievable, the leaseholders of Charter Quay had the right to buy the freehold for a court-assessed £1 million – it was valued by the Tchenguiz organisation at more than £4 million.

The jubilation of the leaseholders at last to be be free of their detested landlord was celebrated at a fete in 2013 with bands and bunting and the local MP Sir Ed Davey – now LibDem leader and one of the MP patrons of LKP – pouring out the drinks from a six litre methuselah of champagne.

This was a huge local achievement, but what made it of national importance was that Mr Boyd, through the Leasehold Knowledge Partnership which is also the secretariat of the 220-strong All-Party Parliamentary Group on leasehold reform, then set about sharing his expertise to help other leaseholders and to educate officials, the Law Commission, CMA, FCA etc and ministers on the need for changes.

The impetus for these was hugely assisted by the greed of UK plc housebuilders themselves.

From 2008 they began selling disadvantageous leasehold houses around the country, with duped buyers assisted by taxpayers through the Help To Buy scheme; they introduced highly aggressive 10-year doubling ground rents, which meant homes could not be resold; they built atrociously.

And dangerously, by cutting corners and then insulation suppliers fiddled the regulations, as the inquiry in the Grenfell tragedy has demonstrated.

By this point, government’s patience with our housebuilders had finally snapped. Michael Gove, the housing secretary, was devastating in his criticism and they are now being made to pay to put right the building safety defects in high-rise flats that they build.

Perversely, in the face of all these scandals the Leasehold Advisory Service had remained silent.

It fulfilled its very useful role in offering legal advice to all comers, but it did not warn government of the ground rents scandal or the impending disaster for flat owners following the Grenfell tragedy.

In the autumn of 2017, LKP was asking: could leasehold actually withstand the kind of scrutiny it was going to receive as a result of Grenfell.

When the government – insanely – dabbled with an ill-thought out plan to dump cladding remediation costs on the entirely innocent buyers of flats via a forced loan scheme, it was left to us to derail the proposal, with utter silence from LEASE.

The quango now gets a new chair – its long standing chief executive has also gone – a new board and a new role to warn government of problems in the sector and to advance the cause of leasehold reform and commonhold.

Only last month, the veteran MP Sir Peter Bottomley pressed the case for the “overdue reform of the Leasehold Advisory Service that has failed leaseholders for too many years”.

The citadel has at last been stormed and consumers have gained control of a quango that should always have been fighting on their behalf.

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