October 14 2018
UPDATE: On January 29 2019 Communities Secretary James Brokenshire held a round table with leaseholder groups, assuring them that zero ground rents were on the table.
Sebastian O’Kelly, of LKP and www.BetterRetirementHousing.com, argued for retirement housing also to lose its exemption from any ground rent ban.
This week we should have been able to announce three very positive proposals for supporting leaseholders. This followed on from the excellent work by Secretary of State Sajid Javid and his radical commitment that the government had finally agreed to a “crackdown on unfair leasehold practices”.
Unfortunately, Sajid Javid was promoted to Home Secretary and replaced by James Brokenshire.
In a script that nobody would have believed, even in the world of “Yes Minister”, Brokenshire is putting forward three proposals so deeply flawed and massively ineffectual that we wonder what he imagines is doing, and why?
The three announcements
1) A consultation on ground rents for new builds: https://www.gov.uk/government/news/communities-secretary-signals-end-to-unfair-leasehold-practices
2) A working party looking into the regulation of property agents: https://www.gov.uk/government/groups/regulation-of-property-agents-working-group
3) A statutory instrument on the creation of formal residents groups: http://www.legislation.gov.uk/uksi/2018/1043/contents/made
So what has gone so horribly wrong?
1. Ground rent consultation
In December last year Sajid Javid announced a bold move to “restricting ground rents in newly established leases of houses and flats to a peppercorn (zero financial value)”.
This was a move welcomed by everyone, except of course those who benefitted from this feudal practice, i.e. the landlords and developers.
This has been diluted into a timid whimper.
The consultation due to be launched on Monday now merely proposes changing the ground rent on most, but not all, new houses to a nominal (£10) rather than a peppercorn ground rent.
The problem of onerous leases in existing leasehold houses, and Sajid’s commitment to come forward with solutions before the summer recess, have evaporated. Flats are not even mentioned. Exclusions are proposed for some houses. There is no mention of ‘fleecehold’ or the ‘administration’ fees now prevalent.
The press release can be read here:
Communities Secretary signals end to unfair leasehold practices
Majority of new-build houses to be sold as freehold and new leases to be capped at just £10 – ending unscrupulous practice of unnecessary leaseholds. New measures to make it easier for leaseholders to get tenant associations formally recognised and protect consumer interests.
Even the government’s press team seems not to check their releases and make basic mistakes. They advise that one of the objectives of the government’s ongoing work is:
“…, helping existing leaseholders who want to buy their freehold by working with the Law Society to make this process faster, fairer and cheaper, and ensuring tenants are not hit by unfair rental costs.”
The Law Society is the solicitors’ main trade body. What they probably meant to say was the ‘Law Commission’, which is the independent statutory body tasked with reviewing the legislation.
And why £10? What is this for? Ground rents are for no designated service whatsoever. Just end them.
Even £10 is a danger for leaseholders. LKP is aware of debt collecting solicitors chasing these, and adding costs.
What is needed is: stop creating more leasehold. Stop selling communal property tenure as a vulnerable tenancy, which encourages unscrupulous conduct.
Introduce commonhold, and get England in line with other countries in the rest of the world.
2. The regulation of property agents
This was another strong commitment by Sajid Javid, first publically announced at the Association of Residental Managing Agents (ARMA) conference last year. (Readers may be amused to learn that LKP was asked to organise for the Secretary of State to speak to the ARMA members last year. Not only did ARMA fail to credit LKP but they have been massively keen that we shouldn’t attend this year!)
What SoS Brokenshire announced is a working party to look at the issues. The problem is that not only is LKP not included but neither are any of the other groups involved in the regulation of this work, i.e. ARMA, ARHM and ARCO. One group who is included is LEASE, even though they have no mandate to cover this area or any experience in this field.
LKP was officially informed about the new scheme the day before it was announced, but things might smell a little more fragrant had LEASE not let it be known several weeks previously that they thought that their involvement in regulation might suddenly and unexpectedly be about to grow.
Of course it’s the Minster’s choice who he invites to help, but he can only act on advice.
3. Recognised Tenants Associatons
SoS Brokenshire asserts that the new Statutory Instrument (SI), which follows on from the back bench amendment introduced by Sir Peter Bottomley MP in 2015, will help make it “easier” to form residents groups.
Leaseholders may begin to smell something a little rotten when they get to this section:
“While many landlords are happy to engage with residents’ associations in their building…”
Lots and lots of landlords and managing agents obviously claim to officials that they love to work with residents groups. LKP has highlighted to officials the obstacles standing in the way of RTA’s for seven long years now. Despite this, the officials still don’t seem to find it strange that landlords and managing agents put so much effort into ensuring that RTA’s aren’t formed.
Leaseholders may be holding their heads in their hands when they get to this section:
“Under the new rules, landlords will be required to provide contact information of eligible leaseholders to the secretary of the residents’ association within 4 months of the request, providing that leaseholders have expressly consented to their details being shared.” [My italics.]
The SI is so weak that Sir Peter Bottomley is considering asking Parliament to cancel the whole thing and start again.
It is an insult to leaseholders, the sector and the lawyers, who have tried to provide input the Deparment over 7 years, that officials should make such a mess of this simple issue.
This SI follows no less than three consultations on RTA, the last of which ended nearly a year ago. Even the information provided to MPs is wrong. They have been told that the output from the last consultation has already been published. If it had it been it would be clear that it formed part of the basis for the SI. However, the MPs have been misinformed. The results of the last consultation have not been published. The relevant .gov page simply states “We are analysing your feedback”. As well as this many of the issues set out in the SI did not seem to form a part of any of the three consultations.
Minister Wheeler has assured Sir Peter that he will feel “happier” when he reads the explanatory notes to the SI. We fail to see how any ‘explanation’ can overcome the fact of the fundamental errors in the way the SI was written.
Related posts:
Sajid Javid pledges Help To Buy clampdown on ‘feudal’ leasehold terms
Labour MP Helen Hayes ‘disappointed’ by Sajid Javid’s response on leasehold scandal
Sajid Javid vows to ‘stamp out abuses’ over leasehold that make homes unsellable
Leasehold houses to be banned and future ground rents set to zero, announces Sajid Javid
Competition and Markets Authority cannot investigate leasehold mis-selling because of Brexit, Brokenshire told
Bellway and Peabody cave in over Grenfell cladding costs at New Festival Quarter
Bring back Sajid! It’s outrageous that something so obviously sensible is taking so long and being watered down along the way. And no help for existing leaseholders with high ground rents and unmortgageable properties.. just not good enough. Open season for whichever political party commits to delivering real reform – millions of votes up for grabs.
We don’t want reform , we want it abolished . It can be done Follow Scotland and Ireland as an example and get this outdated, immoral practiced banned once and for all. This is a vote winner for sure !!!
Exactly. What a pathetic response when we have the Law Commissions more comprehensive review. Does that mean he will ignore it. What a corrupt lot. My email back was:
Sorry but most of us do not see the point of yet another consultation. We are at the end of the Law Commission consultation on Enfranchisement and do not think it will be acceptable to use yet another consultation as a delaying tactic. As seems. I have read large chunks of the Scottish and Northern Irish Leasehold reform laws and policy papers and all the principles and issues can almost be copy and pasted. Only the English lawyers and lawmakers seem to be in a muddle or is it their vested interests getting in the way of rational thinking? It definitely gets in the way of talking justice. The Law Commission has already laid out sensible proposals the sticking point being “compensation” another red herring as if these parasitic freehold traders had actually invested anything more than a pittance into “our” homes when in fact we are the ones who have borrowed a small fortune. Ours was all risk, theirs no risk at all. Not to mention the fact that we were missold and ill advised, buying a house when we should have seen “leasehold interest” for sale, not house or flat.
England is the only country with this appalling system. Northern Ireland and particularly Scotland have much fairer systems, though still not as they should be. About time English law and lawyers dragged themselves into the 21st century to get rid of residential leasehold one way or another as its only function is to rip off ordinary citizens. What kind of state allows that.
This is worse than a carry on film. Consultation after consultation yet no action.
It seems like no-one has the balls to do anything.
In the meantime thousands remain trapped. Their lives on hold. Stuck in the leasehold nightmare. Facing escalating ground rents, service charges, cladding costs etc.
The NLC would like to meet James Brokenshire. It worries me how much of the information actually gets to him. Please meet the people caught up in this mess.
Katie, Welcome to the real world of Leasehold.
Since I began posting on TTAS – Peverel Action – CARLEX and now About Peverel/Firstport politicians have come and gone 13 Housing Ministers later there is no stomach for the Leasehold Fight.
TTAS and Peverel Action were potentially hacked and now About Peverel/Firstport is down for the third day running. Seb has my contact details..
When will the people who can effect change ever go beyond dipping their toe in the water ? Why so afraid of real action ? Action that matters to real people ?
What happened to Sajids promises ?
He said “our home is supposed to be our anchor, our little patch of certainty in an uncertain world”.
Instead, for existing leaseholders, these ‘homes’ have become virtual prisons. Prisons with escalating ground rents, uncapped service charges, ridiculous ‘permission fees’.
All we all want is what is moral, just and fair.
Instead, we still have a Leasehold system which remains immoral, unjust and unfair.
Don’t tinker around the edges, take some real action. Leasehold is only fit for the bin.
Well said, LKP! There is no reason at the present time for any of us to have faith or belief in the determination of James Brokenshire to do what needs to be done FOR HOME-OWNERS. An examination of Brokenshire’s career to date shows that his forte is in financial management, specifically in increasing financial efficiency, AND that he has an extremely sorry record in the field of human rights issues. In other words, it is unlikely that Brokenshire has the heart to respond to the plights of home-owners from the human perspective.
That the LKP and others have not been included in the working party which Brokenshire is forming to look into the regulation of Managing Agents is outrageous. That LEASE, which has an appalling record for being of next to no actual use to Leaseholders while being very much in league with the Residential Property Management Industry, IS to be part of the working party is suspicious.
A relatively small number of home-owners have been selected to meet MPs late tomorrow afternoon. They have no doubt all been rehearsing their lines, and they will no doubt tell the same stories that have been submitted by all of us several times now in forms and surveys, albeit with a personal and a direct twist by virtue of their being face-to-face with MPs. BUT would it not be a better use of tomorrow’s valuable contact with MPs, for home-owners to present their discontent with the burning issues of the moment? For example, the contents of the paper that Brokenshire is to release tomorrow. Surely all the home-owners who are meeting MPs tomorrow afternoon need to have digested tomorrow’s news and thus be able to articulately and convincingly give MPs their immediate feedback to it!
But this needs to be coordinated. Can LKP digest the information and circulate it as quickly as possible to all those home-owners who are attending the Westminster workshop?
The core issue with stating that leaseholders are “home owners” is a lie perpetrated by the whole sorry industry. No leaseholder owns anything other than a piece of paper called a lease. They are all merely tenants to a landlord.
We need action
Abolish this ridicoulaous system
This system has wrecked people’s life’s lie after lie after lie
If this government won’t do the right thing and abolish this outdated , money making leasehold scam then the government needs changing . Which political party will commit !!!! 5 million leaseholders have the vote they should remember this
I warned. Still, the Tories are unlikely to survive their own self interests much longer.
Not to say we should bank on Corbyn, mind.
The tactic seems obvious. Talk and consult and talk some more. Then consult again and repeat. Even if a half decent reform bill reached the House too many trough nuzzlers would ensure it would not scare the horses
There will come a point when leaseholders will revolt! Any more consultations and drastic action will need to follow – I’ve suggested chaining ourselves to Parliament railings before and can assure you this is not a joke unlike these constant avoidance tactics.
This is a great case study in how big money is corrupting our democracy. Mr Brokenshire’s sloganeering does not fool us – we know his proposals are a serious downgrade on Sajid Javid’s.
We cannot let the corporate lobbyists win.
Let’s all make sure we respond to the consultation. I am guessing government is launching yet another consultation to allow the big developers, ground rent speculators and solicitors to make an even more convincing case for the maintenance of the feudal leasehold system than they did last time.
We won the last consultation, with the majority of respondents clearly in favour of wide-ranging reform. Having 6,000 responses to a government consultation broke records and demonstrated the strength of feeling and need to phase out the tenure for reinvigorated commonhold.
Now it seems like they want to wear out leaseholders. Consultation, consultation, consultation. Eventually, the reforms will be so inconsequential they needn’t have bothered. But at least politicians from the ruling party will then be able to point at something to say they have taken action, in an attempt to depoliticise the issue. To let the human suffering and wealth erosion continue with these leasehold products. To let the developers and property magnates continue to amass great fortunes on the backs of hardworking people who thought they owned their own home (legally they are tenants).
They may well have the money to lobby our lawmakers and the civil service, but we have people power.
“First they ignore you, then they laugh at you, then they fight you, then you win.”
So those with existing onerous leases and spiralling ground rents get no help or support? Wasn’t that what started this entire process in the first place? People trapped in properties which they can’t sell?
We need actions, not continuous talking.
Leaseholds need abolished, not reformed
It seems to me that Brokenshire has put his feet up on his desk, folded his arms, and said, “Simples! Problem solved! We make all new houses ‘Freehold’, and we make it easy for people to take Managing Agents to Tribunals!”
What that means is, yes, they’re going to “insist” that all new houses are Freehold, not Leasehold, but that Freehold is going to be “Fake Freehold”! And the moment we raise objections to that they’ll say, “Ah, but don’t worry anymore about Managing Agents lording it over you ’cause we’re going to make it easy for you to take them to Tribunals!”
NO! NO! NO! No more Fake Freeholds!
And taking ANYONE to Tribunals is NEVER “easy”!
When you BUY a house you should not have to take to a Tribunal any Managing Agent lording it over YOUR PROPERTY! There should not BE any Managing Agent lording it over your property!
Phasing out Leasehold houses only to replace them with Fake Freehold houses is no progress at all!
Reform is coming, but is not going to be from this government, which is weak and divided. Abolishion on the Scottish model is best, and proper regulation of managing agents must come first.
Buildings need to be managed by professional and competent agents. Accounts need to be transparent. At the moment, I could set up a management company with my dog as director and I doubt anyone would know any better. All I need is a dodgy freeholder to appoint me to run the building and I can issue service charges to my hearts content.
RTA’s have no teeth as things are, so until they are given the power to actually appoint the managing agent, what’s the point?
Message to Mr Brokenshire ,
By delaying the inevitable,By watering down what is the morally and economically correct thing to do for both leaseholders and the country you have put yourself on the wrong side of history.
You have caved to the vested interests, be it developers off shore freeholders or the financial markets at the expense of the people in this country.
Proper change is coming. The damn holding back reform has broken.
If you cannot see the tide of change brought about by peoples utter revulsion at the dubious antics and gaming of leasehold by unscrupulous developers/ freeholders you will be swept aside into historical obscurity. A man who came. A man who saw. A man who people asked “Who was he when he was gone? “
These proposals do not go anywhere near far enough to address the Mirard of difficulties that home buyers are experiencing. If ground rent is to remain then the property is not “ free from hold” at all. A tribunal system to address managing agent fees would not be needed at all were leasehold abolished, it will just bring yet another layer of bureaucracy and a chance for supposed “professionals to collect legal fees. The whole leasehold industry is feudal to the core and it will eventually break the housing market completely. All those shiny new apartments will be left empty when prospective buyers realise that they are only buying a piece of paper called a lease that will bring them long term financial penalties. The retirement property industry included.
We should be keeping up with the rest of the world and look at promoting commonhold tenure for apartments, all houses should be freehold. if this isn’t done the housing market will stall, leaving both GR investors and the developers without an income stream, dear oh dear.
Sally M, you say “The whole leasehold system is feudal to the corp”
You may be interested to know the term “Feudal” is derived from the word “Fee” which is the “fee” payable by tenant farmers to their lord and masters for the right to work the land.
I am finding it hard to believe that this scandal is going on in England in this day and age. Yet another housing minister carrying out yet another consultation. Speak to the people caught up in the leasehold and fleecehold scandal to learn the realities. The government is listening to those that make money from this scam.. Well we know money talks but we are not going away, we will keep on fighting and will use our vote against those that do not listen. Scotland abolished leasehold and it doesn’t exist in the majority of the worlds countries. Why is England still in the dark ages on this?
Of course they will continue to have a consultation process as long as the legal people and the finger in the pie gang are milking it. While the rest of the world has moved on including the rest of the UK. England remains living in the past. And how many of our politicians have an interest in this?
I’m in a leasehold house but this will also apply to flats:
1. Freehold and commonhold only from now on.
2. Buy freehold using simple formula (example 10x ground rent) like Northern Ireland did for existing leasehold properties.
3. Council run/takeover cutting grass (rather pay extra to them than a unregulated rip off company).
4. Remove permission fees during buy back of freehold (true freehold required).
5. Then abolish leasehold.
6. Compensation given to people who were mis-sold and lied to. (My example, told I could buy my freehold after I moved in so trusted developer and then they sell freehold to investor without offering it me first. Told it would be approx £4k to buy from developer but now investor wanted £9k plus legal fees. This would include permission fees and not true freehold. Disgusting tactics and happened to thousands of families across the country).