One does not wish to be unfeeling … but you would need a heart of stone not to laugh at the misery of ground rent punter David Stevenson in the FT (given the litany of miseries faced by leaseholders in terms of ground rents, permission fees, threats of forfeiture, David and Goliath battles in the leasehold tribunal etc etc etc …)
He is an investor in the Ground Rents Income Fund plc, which thanks to the furore over the doubling ground rent scandal is warning of a £6 million hit, with shares trading down at 122p.
David Stevenson writes:
“When I first wrote about investing in ground rents two years ago, I was almost embarrassed to classify it as something even vaguely “adventurous”. But it has become a political hot potato …
“My portfolio doesn’t contain any shares in Taylor Wimpey, but the negative headlines have had a knock-on effect on the Ground Rents Income Fund.
“This was supposed to be about as boring as you could get, churning out a steady 3.5 to 4 per cent inflation-linked yield year in, year out generated by income from ground rents …”
Actually, the Ground Rents Income Fund plc is far from boring.
In a PR-friendly manoeuvre, the fund is contacting all doubling ground rent leaseholders and offering a conversion to RPI, if desired.
A double dose of bad news for my investments
Having survived the rollercoaster year that gave us Brexit and President Trump, I’ve largely stopped worrying about politics and its likely impact on my investment performance. However, a number of recent headlines have had a direct impact on a select number of investment trusts I’ve previously featured in this column.
So far unexplained, however, is the connection between the GRIF and the property management company Braemar Estates.
According to James Agar, the CEO, the fund is “committed to being a socially-responsible landlord, working hard to treat all leaseholders in a simple, honest and transparent manner”.
Mr Agar is given as a director of Braemar Estates, while Braemar chairman Martin Robinson and Mr Agar are directors of GRIF Cosec Limited, which appears to own the freeholds of the fund.
LKP has asked Mr Agar and Mr Robinson to explain the connection between the two companies, but has not yet received a response.
There should not have been much cause for delay, as conveniently both Ground Rents Income Fund plc and Braemar Estates appear to share the same offices at Richmond House, Heath Road, Hale, Cheshire.
Related posts:
Rendall and Rittner buys Braemar Estates
Leasehold first-time buyers trapped in leasehold homes with £800 ground rents, says BBC
The Sun says … ‘thousands trapped in leasehold homes due to spiralling ground rent costs’
Ground rent speculator Robert Steinhouse cuts and runs from Nova House, but who pays £4m Grenfell bill?
Gleeson tells ground rent speculator Landmark Investments to remove testimonial
BBC Radio Manchester wades into the leasehold houses scandal
I know of private investor who invests heavily in ground rents who said the other day that the market value of feeehokd grounds secured on shortish leases in London and the south east has risen sharply mainly because there is unlikely to be any changes effecting the values of these type of investments . He believes that there could well be a downward movement in the deferment rate and capitalisation rates used to value these investments. This would have a profound effect on values
The current debate misses this important point. The collapse in interest rate in the last 10 years has yet to fully pass down in to those rates – the justifiable outrage over 10 year doubles deflected the spotlight away from. a far more damaging issue which effects far far more than the ten year doublers
The collapse in interest rates has helped many by increasing property values and lowering mortgage interest payments
Excellent! “A profound effect on values”. Maybe I could then buy that terribly smart looking Townhouse in South Ken that I’ve had my eye on. Property prices are far too high. I was told 3 -4years ago by a very smart cookie in the property / petroleum biz that an almighty crash in the housing market was likely in 3-4 yrs. fortuitous or what?
I can’t pretend to Understand the ‘Market’ I operate more in the artistic milieu , however I am visceral and honestly believe that a property crash will be a good thing.What goes up must come down Yadira yadda.
I mean, the earth will continue to turn on its axsis.
As the FCA usefully says ‘Investments can go up and they can come down’
Don’t panic. Sell, Sell, Sell. especially before Help to Buy ends.
Exactamundo! I can’t understand why Stephen seem so exercised about a collapse in the property market? Bring it on! What goes up must come down – law of physics bambino!
yes I cried about the loss of income for those who invested in Ground Rents. (Though to be fair do people really understand what they invest in? Ground rent sounds better than arm deals.)
However I don’t see house prices dropping.
There is a housing shortage and everyone has to live somewhere. Rents are astronomical and landlords not regulated enough. This is from someone who has been a landlord,
The ‘help to buy’ fiasco – needs to end. Speaking simply as a tax payer, I do not want my money going to the dodgy freeholder/GRinvestor/landlord/managing agent/money laundering scheme. etc. best to invest in more and better social housing, or simply let the councils keep the freehold and any reversionary values.
Increase automation and artificial intelligence will destroy middle class jobs and with the continuing pressure on labour cost from China and in the future Africa (possibly) the outlook for property prices is not good at all
Increase in treat rates will bound to cause prices to slip
Hurrah!
Increase automation and artificial intelligence will destroy middle class jobs and with the continuing pressure on labour cost from China and in the future Africa (possibly) the outlook for property prices is not good at all
Increase in treat rates will bound to cause prices to slip
Double Hurrah!!
Won’t be seeing AI or a robot doing my job anytime soon.
Jefferey I am rather curious – do elaborate please!!
I’m slow on twitter. Just noticed Sajid Javid tweeted early today that they had over 6000 responses and “Government will act”.
What will I do with my lifelong cynicism if they do?
Only 956 responses in 1998. Well done LKP, APPG, LKP and any other active acronyms out there.
I’m hoping 5000 weren’t the ‘parasites’, mind. And remember that many many thousands sign petitions and find themselves disappointed. And millions marched against the Iraq war. And nobody will stop The Trumpeter nuking North Korea, I expect. Not in my name.
I think my cynicism is rational a wee bit longer…
Okay, LKP deserved a double accolade but I meant to mention NLC.
Don’t disband yet. Heads-in-sand flat owners will need you.
Sad but true. “head in sand”‘flat owners had better ‘straighten up and fly right’ if the want to effect meaningful change.
Good news re 6,000 plus responses to the consultation. I am fairly certain that a majority were from beleaguered leaseholders.The ‘ Parasites” would have been too busy shafting their clients to fill n the questionnaire and are in all probability illiterate.
Stephen: the market value of “shortish leases in London and the South East” is always subject to existing long leaseholder Right of First Refusal (section 4, part 1 LTA 1987 as amended Housing Act 1996) and any scheme that defrauds the gullible and vulnerable through sleight of hand contracts (on or offshore) can only now be “shortish” itself.
Anyone seeking to purchase Ground Rent residential flat portfolios anywhere in England or Wales should be warned that the full weight of enforcement of EXISTING legislation is destined to descend mighty weightily on their criminal shoulders very shortly. And also on the shoulders of any financial,institution involved in financing such criminal purchases.
And that includes retrospectively.
Note: colluding solicitors/counsel should beware, as members of respective internal disciplinary committees will also be sharpening their quills. “shortish”.
Kim: I am warming to you every day- presume you are still home bound on a long lease! Ask Admin for my email add.
Any serious purchaser iof ground rents will I am sure be aware of the Act and the ramifications of not complying
Property auctioneers will not market the freehold if Section 5 notices have not been served
The main auction houses can’t sell the share capital of a company to get around the Section 5 notices as they are not regulated to sell share capital in that manner
Aside from selling the share capital of a SPV company to avoid Section 5 notices the other method is that some vendors creating an overriding or head lease over each flat , then sell the freehold and because of the existence of the head lease avoids Section 5 requirements. The following day they then sell the overriding leases to each unit to the same purchaser
many believe including Phillip Rainey QC who is well thought of by LKP feel that as lessees have the right to appoint an RTM and the right to purchase the freehold or claim a lease extentsion that the law surround Section 5 should be repealed
https://www.leaseholdknowledge.com/philip-rainey
See point 18
Ordinarily a vendor would get a better price for the freehold from the lessees
There are a number of large family trusts and wealthy individuals who ideally just want the ground rent income and the future lease extentsions and if the property is subject to an RTM makes it more attractive to these types of investors as there are no management obligations for the freeholder
Whilst I hold a negative outlook on property prices many still think prices will rise and with a short lease the cost of a lease extentsion rises by 5% per annum plus whatever the property rises by in percentage terms. So if property prices rise by 10% the cost of a statutory lease ext rises by around 15% in a year and as short lease freehold ground rent investments trade at around 100% of enfranchisement price than the investment rises by around 15% and requires very little input from the investor especially if an RTM gets formed
If property prices were to fall by 10% in a yer then the investment would fall overall by around 5%
Alec, yes indeed. I have shared Freehold of a Victorian conversion into 7 flats.
We were managed ‘ in house’ 20 yrs by me up until several years ago.
We currently have a Managing Agent who I personally believe is unfit to work in Residential Property and in addition her employer is a prolific ‘ Ground Rent Residential Flat Portfolio ‘ Merchant,whose management companies over the years have been ordered by LVT to repay hundreds of thousands of leaseholders cash.. Same old story!!! Couple that with naive directors of the Freehold company whose conduct has been at best Ill judged……. and one has a car crash waiting to happen!
The toxic ‘gangster’ practices perpetrated by individuals such as these ,which include wild overcharging,inappropriate threats of forfeitures, threats of legal action from shady solicitors.
This behaviour that leads in many cases to serious harassment of individual tenants and sometimes whole communities cannot be allowed to continue without introducing proper forms of legal discipline and serious financial or d.ccustodial penalties for those who perpetrate such nefarious practices.
The Rachmanist era is obsolete and must remain so!
And yes, I shall ask admin for for email address. I am sure we could an interesting conversation………
Kim, If I have it right you are being sued by managing agent for unpaid bills? And case is to be heard at Property Tribunal shortly, what date will the case be heard?
The scoundrels (before the 9.00pm watershed so I can’t use a more suitable word) will of course regret their action against you. They will be exposed as cads and bounders (watershed) and leave court with their heads covered as a righteous mob assail them with abuse and threats of physical violence. They will also leave court the poorer. Meanwhile you will leave court with your face wreathed in smiles, and those who were assailing your accusers are now drawn to your presence. They take you bodily and are raised above their heads in triumphal parade through the streets of our capital city.
Later still you are made a Dame and become intimate with the noblest in the land. Your standing and wealth grow exponentially, and you acquire vast freehold interests – happy endings are for children.
Without knowing the full facts in this case I am reminded of that wonderful phrase
There are two sides to every story and then there is the truth
Read my post ‘ Swiss Navel Officer’.
Zat iz zee truth as I and all good upstanding honest leaseholders see it.
On the other hand dodgy venal Agents will not see it that way, I say TOUGH.
Dear ‘Swiss Navel Officer’
Have you read my post detailing the ‘Ill judged’ conduct of a certain Managing Agent et al?
Do you believe that my account of events is plausible?
To paraphrase Aesop- ” There are two sides to every story and then there is the evidence”!
Incidentally.are you an officer who ‘Navel’ gazes or a proper ‘Naval’ Officer ( retired) ? Just Interested ……..that’s all.
Dear David,
To clarify my situation.
1. The nefarious Managing Agent and numbskull 3 x directors in Dec 2014 cobbled together a ‘Major Works’ reserve of £108’000for the cyclical work to be carried out on the exterior of the building in 2018.. (The work should / will cost no more than 32-35,000 max I reckon. Incidentally we have always maintained a ‘REASONABLE’ reserve for Major Works and the building has been maintained to a high standard.
2. I refused to contribute to the ‘UNREASONABLE ‘ sum and suggested we revise the figures. In actual fact the surveyor ( puppet?) admitted to me that his figures were at least 50% too high!
I had used my investigative ‘powers’ to get the mobile number of the callow surveyor. Cor, the managing agent was furious and she is his mate – getting the picture David?
3. I continued to pay all other service charge demands including contributing towards the 4,000 pa “Emergency fund” HA!! Needless to say that always gets spent regardless of whether there is an ‘EMERGENCY ‘ or not. In 2015 the AGM was cancelled on 2 days notice and has not been rescheduled as promised. I had indicated that I would provide an alternative estimate for the major works fund, Funny that ain’t it ?
4. Funnily enough, despite repeated requests, the agent has not sent me the ‘ Service charge budget’ nor any demands for 2017- I wonder Why?
I requested to inspect the invoices etc accounts year ending 2016, I had inspected the previous 2 yrs account and they always contained ‘ inaccuracies ……
The Brighton based Solicitor ( property is London based) appointed by the agent on behalf of the Freehold co directors said that as I was being sued with a view to ‘FORFEITURE ‘ that I was not entitled to inspect the invoices, vouchers etc. POPPYCOCK. I was then told that I could have copies provided by same solicitor at a cost of £185,00 + VAT. POPPYCOCK! I was then told by same zzzzzz that I could travel to Brighton from London to inspect the accounts. POPPYCOCK. I told this solicitor that the documents must be made available at the Agents registered serviced office in London and also that if he/she continues with what are at best ill judged practices I will report said person to the SRA. I await a reply.
David it’s a plain as a pikestaff , the agent wants to have a vast amount of leaseholders cash in the coffers and at his / her ,so when the major works take place it can all be gobbled up by dodgy contracting companies associated with the agent who will find ‘ spurious ‘ faults with the property where ‘URGENT’ works will need to be carried without an with s20 consultation.
My lease states that reasonable sums from time to time may be requested by the ‘freeholder’ for future maintenance of the building! Simples! My contract is with my lease and not some crooked Managing agent who picks an arbitrary figure and expects to receive it without question. My agent has been castigated at LVT rulings more times than bears s#*t in the woods.
These nefarious individuals have between them decided on the cost and scope of the works including ‘Fees’ and VAT, They have also stated that by ‘bringing the works forward’ they are saving us 37,000. HUH ,HOW .
Anyway that’s the story so far and no date for the Tribunal hearing.
The positive thing about this farce is that had I not experienced such unseemly behaviour I would not be a part of the :
ABOLISH LEASEHOLD- STATUTORY REGULATION FOR MANAGING AGENTS- ABOLISH FORFEITURE , Movement.
Edit above
“At his or her disposal”
Kim, For the record, even without knowing the detail, I had conviction you were in the right – on my way out, will read the detail later and then comment. My only concern has always been the system and how there is collusion against justice.
I hear you David, however my lease is very clear and the Agency firm directors have I am dealing dealing with have got what is known as FORM! And I have got what is known as ‘EVIDENCE’ of wrongdoing.!
”castigated at LVT rulings more times than bears s#*t in the woods’ – very funny. Must be something about stacking up loads of reserves as our managing agent has almost stacked up £110,000 of reserves and it looks as though he is hoping to build it up to £200,000 before he starts the major works. This is three times his original forecast. What home owner (freehold, that is) in their right mind hands over serious amounts of money to a project manager before they have even seen a detailed specification and sought out competitive competent contractor quotes and yet this how the fleecehold system works. Leaseholders are treated as dumb cash cows and despite paying for everything have no control over how their money is spent. It is a rotten system to the core and it is time to abolish it. MPs are you listening?
Fleeced Leaseholder, I have ‘ SHARED FREEHOLD’ but,with gormless directors of the Freehold co and a clearly unscrupulous Managing Agent from the Peverel/ Freshwater stable. Mama Mia!!! Still I have problems. Shared Freehold can mean ‘All or nothing at all’ If idiots or worse Machiavellian directors.are running the show. Actually they are are too stupid to be Machiavellian!!! These fools are like meat and drink to unscrupulous Agents.
After much deliberation I can only come to one conclusion and it’s this:
The directors are allowing the agent to ignore the individual leases and behave in a very questionable manner simply because they are not planning to deduct sums that fall to be deducted since they are lessee liabilities as against liabilities of the freeholder. In short getting others to pay for the work that they the directors are personally responsible for.
I heard on grapevine that one such individual is planning on replacing the dormer window and perhaps “Improving’ it into the bargain. Hmmmmmm .The bulk of that cost is the lessee liability.
Perhaps the Agent persuaded them to get lots of cash in the
kitty and ,not to take lessees liabilities seriously,employ contractors connected to the agent and yadda yadda yadda. Oh man, I could go on…..
Incidentally, a director of a contractor used by these toxic individuals was tracked down by me – He as a bailiff and produced what I believe was a false invoice. I also believe the company was in liquidation at the time.!!
Don’t get shafted or bullied. Change is coming and Managing Agents must be Strictly Regulated.
IT IS BANDIT COUNTRY OUT THERE.
Are you listening the Rt Hon Sajid Javid MP?
….
Service charge bill has risen 5% to cover 2017/2018 if there is a way I can share a picture of the bill I will. It’s certainly trying it on!.
They seem to forget that i work for one of the major manufactures in my field and know all the facilities management games.
Service charge bill rose 5%? Ours rose 400% to incorporate the dodgy ‘Major Works’ figure by our unscrupulous agent.,
Kim, Have to say I didn’t fully understand the detail. It matters not, I get the all too common drift, which is your managing agent is using you and other leaseholders as cash cows and the conspiracy goes deeper, involving surveyor, solicitor, and contractors. I will repeat myself here, I do not doubt for one moment that your presentation is accurate and there is, in effect, an attempt at fraud taking place against you and co-leaseholders. it is timely that this is happening now, the entire business of leasehold and the morally criminal individuals who live off leasehold are in a blinding spotlight. I am hopeful, despite my contempt for our legal system, that you will win your case.
Just a word on things in general, I am sure you had other things to do with your life than engage with low lifes. This is what angers me about leasehold, there are others like you whose lives are turned upside down due to crooks who are enabled by our supine government and parliament. I can only quote the APPG –
“There is a question not asked in the consultation:
“Why has it has taken so long for parliament, the civil-service advisers to ministers and government to stop the leasehold situation getting worse and to start dealing with the historic issues, which have been and are in plain sight?”
Dear David,
No problem in your failing to understand the excruciatingly dull explanation of nefarious managing agents machinations – You got the gist!
Ya gotta ‘Live the dream’ baby to actually understand the cheap venality of such individuals. Yuk,I shall need a disinfectant scrub down when this horrid affair is over.
Proper sobbing here for him ????????????
It wasn t until it was hiked up around my knees that i realized what i was doing.
So when I use Will, I create a hole in the fabric of the universe that normally would be
filled by these particles that should come into existence.