Taxpayers will have to intervene over cladding, by issuing loans, to prevent hundreds of leaseholders losing their homes.
But the crisis shows the pointlessness of current leasehold landlordism.
What do they actually do, apart from having all the power over ordinary people’s homes and raising revenue for themselves?
The Grenfell cladding crisis demonstrates to an ever widening number of politicians and administrators that they do absolutely nothing at all.
Tchenguiz / FirstPort in court to dump £2m Grenfell costs on Citiscape leaseholders – despite Sajid Javid plea
When it comes to expenditure to make a building safe – a building which in law they own, on land which is also theirs – they do not pay for a single thing.
Even when it comes to the safety of the residents.
Not. A. Penny.
Leaseholders face £19m to £40m Grenfell cladding bills at Galliard Homes’ New Capital Quay
Over the whole Grenfell cladding issue the freeholders are exposed. They are not the objective, business-minded custodians of a block of leasehold flats, who ensure its long-term maintenance.
This is a fiction they have spent years promoting, aided by their eager little assistants at trade bodies such as ARMA (the Association of Residential Managing Agents).
Fresh building is to pay £100,000 for fire marshals … with more Grenfell bills to come
Ground rent speculator Robert Steinhouse cuts and runs from Nova House, but who pays £4m Grenfell bill?
Instead, freeholders are now revealed as simply an unnecessary and over-complicated parasite, hitching a ride on the home-owning aspirations of others.
In the recent issue of Private Eye, Will Astor’s Long Harbour / HomeGround group was congratulating itself for issuing a £750,000 emergency loan for fire marshals at Heysmoor Heights, in Toxteth, Liverpool.
Will Heysmoor Heights leaseholders lose their homes to anonymous offshore freeholder if they cannot pay Grenfell bills?
Come again? The freeholder provided the funds to save its own skin with the fire authorities and then set about spending the money as it saw fit, with no reference to those who will have to repay the money at all.
With commonhold tenure this would have been impossible and the building may have had to have been evacuated.
Possibly. Although its worth remembering that the rest of the world – outside England and Wales – sells flats with proper ownership structures and has to deal with these emergencies.
And at Heysmoor Heights the freeholder is a murky offshore company called Abacus Land 4 Limited, based in Guernsey, where the beneficial ownership is kept hidden.
Astor’s group says he has no beneficial interest and the investors are blameless British pension funds that just happen to want to own this freehold through an offshore vehicle for “administrative convenience”.
Well, if the arrangement is so innocent, it surely does not need to be secret.
At Heysmoor Heights we face the appalling prospect of low income home owners having their flats forfeited over the Grenfell cladding bills by anonymous speculators in ground rents.
That cannot be right, surely?
Meanwhile, we have the chief executive of ARMA, Nigel Glen, running around Whitehall and Westminster urging that public money be spent to ward off precisely these issues.
This is a view echoed by London mayor Sadiq Khan in correspondence to Sajid Javid.
Of course, Glen is doing this primarily to protect the landlordism that employs the members of his trade body, rather than in the interests of leaseholders.
Nonetheless, it is useful that he is doing so.
The more he says only public money can save ordinary people’s homes from a disaster that was absolutely not of their making, the more he reveals the absurdity of the freeholders’ power and position.
Even the most credulous civil servant must be asking: what do they actually do for all that money?
When will government finally realise that all leaseholders need more protection from freeloading freeholders who will take any opportunity to shirk their responsibilities at leaseholders expense. Sajid Javid may well hope that freeholders will address essential cladding replacement at their own expense (and so they should!) but until these obligations are enshrined in law, investors will never be so inclined and only a tiny minority of freeholders who care about their reputation and/or possibly have a moral compass will act with integrity. If the taxpayer does end up taking a hit over this scandal, I can only hope this will focus minds in governrment and legislation will be enacted to end the gravy train. Like Sajid, I can’t help bring an optimist but my realistic side knows it will not be so easy…
Absolutely brilliant synopsis LKP. I love you lot!
Nigel Glen (ARMA)
You say ” there is no suggestion that anyone has acted inappropriately or cut corners, rather, that building control approved and signed off the various type of cladding at the time and have only now tested these very systems and found unsuitable”
I say ” YOU ARE WRONG!”
Garnock Court, Ivirne, Nth Ayrshire in 1999. A fatal fire for which cladding was blamed for the rapid spread of fire, which resulted in the Building (Scotland) Act 2003. Does that ring a bell Mr Glen?
How about the parliamentary report on the safety of cladding from 2000?
You still want to maintain that no one knew of any problems concerning cladding? Really?
A deal is put on the table that in return for paying a ground rent and maintaining the building throughout the term the property is leased to you. Those terms, however unsavoury they may be, are there on the table in a clear form to be reviewed in some depth with legal advice PRIOR to an exchange of contracts. Based on that information the purchaser has to evaluate those terms and decide whether the premium is worth paying.
If you agree and sign the contract you cannot then after the event say the principals of the deal are unfair.
What you can challenge is whether the service provided are reasonably incurred and whether the covenants in the lease are being upheld by the freeholder.
So, I imagine you deprecate leasehold reforms such as enfranchisement (the compulsory purchase of a private citizen’s property by another), lease extension, property tribunals, the Leasehold Advisory Service (well, I am with you on closing that one), and other moderating legislation on the rights of private property (such as Magna Carta, for example)?
I think your argument is similar to slaveowners telling slaves to stop moaning because the law permitted slavery; or shipowners complaining about Plimsoll’s attack on private property by banning them from overloading ships.
I am afraid leasehold issues are now beyond the grip of leasehold sector insiders, who for so long and so successfully muddied the waters and kept this gig going.
Sadly for you, and others in it, too many people, and their representatives, understand the sector, and recognise a scam when they see it.
I suspect you may have to retrain.
That explains as to why when Plimsoll was a freeholder/managing agent his development “sinking funds” were so much more reasonable than that of Firstport’s?;
How significant is it when referring to paying for replacement cladding Firstport use the phrase “In the absence of alternative funding?”
Does this indicate that they as landlord(rather than managing agent) do not have funds to replace the cladding?
Does this indicate that the freeholding companies have similar financial issues?
Perhaps there is a strong case as with the situation in Slough, whereby in return for public funds to replace cladding buildings are subject to compulsory purchase with the value being set at the cost of cladding replacement?.
By then selling off the freeholds to leaseholders local authorities could recoup their expenditure..
This scenario could be brought about if the local authority issued an enforcement order against the freeholder/landlord..
I support your suggestion why not get LKP to run an article on this and suggest it to the Government and APPG ? This could get the ball rolling on ending leasehold.
Your comments assume most occupier leaseholders have multiple choices of properties to buy in the places where they want to live and within their budgets.
The existence of a system which is fundamentally flawed which does not exist in Scotland and Northern Ireland discriminates against those living in England and Wales.
If business had not in the past acted unethically there would be no need for unfair contracts legislation. Leasehold will be abolished its time is ending. Its time to look to a fairer future.
Hello again Stephen old boy, “principles”, not “principals”. A principal is, amongst other things,
“the most important or senior person in an organization or group”, Often confused with “principles” by the ill educated – this definition and rider came from Cambridge Dictionary.
Not at all wise to put forward legal propositions when you have a Readers Digest knowledge of the law. You say “If you read and sign the contract, you cannot then say after the event the principals (sic) of the deal are unfair” In English law there is such a thing as an unfair contract, and if a contract is unfair, it is not binding – “Contracts can only protect you if your terms are fair. If a term is not fair, it won’t be legally binding on your customer”.
May I draw your attention to this statement in your post, “those terms, HOWEVER UNSAVOURY they may be, are there on the table…….”. I think it is called being hung by one’s own petard”.
Correction, “HOISTED by one’s own petard”. Apologies to William Shakespeare.
Stephen ,That assumes the building is “fit for purpose?” And if developers/building inspectors knew or ought to have known of potential problems with the cladding then surely the building could not be described as fit for purpose?
I agree, I do think there may be grounds for the leasees/developer taking action against the manufacturer for defective goods – . they may hold product liabity insurance
Unfortunately most people buying a flat seem reassured that other people have already signed the lease ‘so it must be ok’ and most solicitors simply see the onerous terms as ‘normal’ and therefore acceptable so good advice for buyers is rare. Developers take the same line telling nervous buyers ‘everyone else has signed up and got a mortgage so what’s the problem?’. If solicitors and lenders were truly on the case, the doubling ground rent scandal would never have happened. With good advice for buyers the developers would not have been able to sell their leases until they changed their terms to something more reasonable. Fundamentally, the system is broken. Sadly, if a property is otherwise attractive, most people will simply sign on the dotted line without really understanding what they are buying into, And many investors will be delighted to exploit that weakness. Don’t blame the leaseholders. They may have got themselves into this by signing up but the system is at fault.
Nigel Glen, safety being your number 1 priority you have urged the government to provide loans to leaseholders to pay for the replacement cladding whilst the legal arguments are sorted out.
So why not urge the government to provide loans to freeholders to replace the cladding whilst the legal arguments are being sorted out?
Under the leasehold system , the freeholders are the legal owners of the building and the leaseholders are owners of a lease . The leaseholders have no legal ownership of the building.and not the correct party to pay for replacing the cladding.
The Government has to enforce the responsibility of the property owners and make the freeholder and its directors responsible for the expense of replacing the flammable cladding on their property.. If they are unwilling ,to pay , the Government must step in .
The Government should put the freehold companies and their directors into bankrupcy and put them all including the one in BVI and Jersey etc out of business forever. The Government cannot use taxes levied on leaseholders to make loans to the freeholders who are stripping the leaseholders of their lifetime savings.
The Government should make the leasehold industry pay by raising the company tax rate from 19% to 45% on developer companies which have sold leasehold property in the past . and impose a dividend ban on the shareholders of those companies..
My ‘professional’ freeholder has not once been to visit the block of flats that I live in, has done nothing to protect leaseholders from breaches of the lease (we have a commercial premises downstairs who built an entire second floor without permission causing misery for everyone above) and now refuses to give permission to remedy any of the issues caused and is dragging its feet despite Council enforcement notices being issued. Shame on you, Adriatic Land 4. We’d have done better under commonhold!
You should make a written complaint to your local MP and ask him /her to make a formal complaint to Minister of Housing for change of property title to Commonhold or NIL ground rent in 999 years lease. And order him/her to support the APPG for leasehold reform as rep[resenting your interests.. Yes your MP was voted into office to represent the interests of the people in his/her constituency. and not the commercial interests of the freeholder.
At the consultation last year, the Government received 6000 complaints about the leasehold system , you should keep up the complaints or back sliding will not bring about any change.
The Local Council Housing Officer has the powers to prosecute but the Government keep the.Local Councils underfunded as result there is no effective regulation to remove leasehold abuse by ground rent investment companies controlled by unscrupulous directors. .
LKP, You ask “What are freeholder’s actually for?
My answer to that question?
THEY ARE FOR IT!
Apparently, all of us who paid taxes up to 2015 helped pay for the cost of ending slavery:
Leasehold property tenure is a form of financial slavery. When will the govt do what it should have done long ago, and bring it to an end without an undeserved premium being paid to freeholders?
If I own a car (freeholder) I have a legal obligation to insure it. It is not a defence to leave it uninsured” because my company(leaseholder) wages were not paid ” And so it is with block insurance.
If I own a block (freeholder) I have a legal obligation to insure it. It is not a defence to leave it uninsured “because my tenants (leaseholders) service charges were not paid”
And so it is over the cladding scandal. It is the duty of the freeholder to make the block safe. Who subsequently pays (ie can it be charged to service charges?) is for courts/tribunals to decide.
But in the first instance the freeholder must rectify the cladding situation
Is it the freeholder’s position that unless leaseholders pay the cladding cannot be replaced?
Questions are posed as to whether leaseholders have the funds to pay for replacement cladding?
I pose the question as to whether freeholders or the NHBC have the funds to pay for replacement cladding?