Leasehold Knowledge Partnership

The registered charity for leaseholders

Menu
  • Home
    • Site map
    • Archive of posts by category
  • What is LKP
    • Privacy and Data Protection Statement
    • Site map
  • HELP FORM
  • News
      • APPG
      • ARMA
      • Bellway
      • Benjamin Mire
      • Brixton Hill Court
      • Canary Riverside
      • Charter Quay
      • Chelsea Bridge Wharf
      • Commonhold
      • Communities Select Committee
      • Conveyancing Association
      • Countrywide
      • DCLG
      • E&J Capital Partners
      • Exit fees
      • Fleecehold
      • Forfeiture
      • FPRA
      • Gleeson Homes
      • Ground rent scandal
      • Cladding crisis
      • Hanover
      • House managers flat
      • House of Lords
      • Housing associations
      • Informal lease extension
      • Insurance scams
      • IRPM
      • Jim Fitzpatrick MP
      • John Christodoulou
      • Justin Bates
      • Justin Madders MP
      • Law Commission
      • LEASE
      • Leasehold Valuation Tribunal
      • Local authority leasehold
      • London Assembly
      • Louie Burns
      • Martin Paine
      • McCarthy and Stone
      • Moskovitz / Gurvits
      • Mulberry Mews
      • National Leasehold Campaign
      • Oakland Court
      • OFT / CMA
      • Park Homes
      • Persimmon
      • Peverel
      • Philip Rainey QC
      • Plantation Wharf
      • Prostitutes
      • Quadrangle House
      • Recognised Tenants’ Association
      • Redrow
      • Retirement
      • RICS
      • Right To Manage Federation
      • Roger Southam
      • RTM
      • Sean Powell
      • SFO
      • Sinclair Gardens Investments
      • Sir Ed Davey
      • Sir Peter Bottomley
      • St George’s Wharf
      • Taylor Wimpey
      • Tchenguiz
      • West India Quay
      • William Waldorf Astor
      • Windrush Court
  • Accreditation
    • Accredited Companies
        • Block Managers Limited
        • Clear Building Management
        • Diamond Managing Agents
        • Dixon Emerald Associates
        • HML Group
        • Home from Home
        • Home Management Group
        • JFM Block & Estate Management
        • Jones Associates Letting & Management
        • Norwich Residential Management
        • Premier Block Management
        • Red Rock Property Management
        • Sapphire Property Management
        • Town & City Management
        • Urang Property Management
        • Vestra Property Management
  • Fighting back
      • Lease Extension
      • Q&As
      • Right to buy freehold
      • Commonhold
      • Bottomley blasts leasehold crimes on video
      • LVT/Property Chamber Survival
      • Tribunal triumphs … and defeats
      • Recognised Tenants’ Association
      • Right To Manage
      • Video
      • Find MP … and see how many leasehold voters
      • LEASE: what’s the point?
      • Pensioners win £68,500
      • Most damning LVT ruling ever made
      • Insurance racket
      • Local authority leasehold
      • Remember to extend your lease
      • St George’s wins £1 million
      • Leasehold law: the reforms
  • Sub-letting
  • Press
  • Contact
  • Parliament
      • Communities Select Committee
      • APPG
      • APPG December 14 2016
      • Commons Debate 20/12/16
      • APPG April 19 2017
      • APPG July 5 2017
      • APPG December 14 2016
  • Right To Manage
  • Lease Extension
  • National Leasehold Campaign
    • Louie Burns
    • Ground rent scandal
    • Michael Epstein
  • Donate
You are here: Home / Ground rent scandal / Housebuilders ground rent scandal compo schemes ‘must go further and faster’, says housing minister

Housebuilders ground rent scandal compo schemes ‘must go further and faster’, says housing minister

March 30, 2018 By admin

… And they should include homeowners trapped in re-sales, too

Heather Wheeler, housing minister, is talking tough on the ground rent scandal

Housing minister Heather Wheeler has declared that housebuilders schemes to the doubling ground rent scandal – which has made 100,000 properties unsellable – “must go further and faster”.

Buyers of second hand properties need to be included, and the housebuilders’ ex-customers need to be “proactively contacted”.

At present, various offers to vary doubling ground rents to rents that rise with inflation have been made by housebuilders such as Taylor Wimpey and Countryside Properties plc, and form some of the funds held by the ground rent speculators, such as E&J Capital Partners and

But in spite of repeated requests Taylor Wimpey’s only applies to those who contact the company, and it repeatedly refuses to say how many leaseholders are affected by the rip-off leases.

E&J Capital Partners in full retreat over rapacious ground rent terms

Ground Rents Income Fund plc says it wants to be a ‘socially responsible landlord’. How about: socially responsible ex-landlord?

The housebuilders were contacted on December 21 2017 by the Communities Secretary Said Javid which “set out his position”.

Mrs Wheeler adds in a letter to Sir Henry Bellingham MP, Conservative MP for North West Norfolk:

“We will be keeping a close eye on progress and will consider measures that could be pursued to take action if necessary.”

We would urge ALL leaseholders caught up in the doubling ground rent scandal to contact Clive Betts MP and the MP members to the Communities Select Committer to haul in the house builder CEOs and freehold speculators for the full Philip Green treatment.

The Select Committee on Housing, Communities and Local Government MPs are:

Mr Clive Betts (Chair) Labour
officeofclivebettsmp@parliament.uk

Mike Amesbury, Labour
mike.amesbury.mp@parliament.uk

Bob Blackman, Conservative
bob.blackman.mp@parliament.uk

Helen Hayes, Labour
helen.hayes.mp@parliament.uk

Kevin Hollinrake, Conservative
kevin.hollinrake.mp@parliament.uk

Andrew Lewer , Conservative
andrew.lewer.mp@parliament.uk

Jo Platt, Labour (Co-op)
joanne.platt.mp@parliament.uk

Mark Prisk, Conservative
c/o natalie.bithell@parliament.uk

Mary Robinson, Conservative
mary.robinson.mp@parliament.uk

Liz Twist, Labour
liz.twist.mp@parliament.uk

Matt Western, Labour
matt.western.mp@parliament.uk

Related posts:

Pete Redfern: Stop pontificating about the housing crisis and sort out the ground rent scandal of Taylor Wimpey’s own making Taylor Wimpey more greedy than the ground rent ‘Mr Smallweeds’ (and so are other plc housebuilders) I had to spend £14,000 to change double ground rent to RPI at Ausden Place. But will I get compo from Taylor Wimpey? Police may need to investigate ground rent scandal, says Bottomley New Housing Minister hits the ground running

Filed Under: Ground rent scandal, Latest News, National Leasehold Campaign, News Tagged With: Clive Betts MP, E&J Capital Partners, Ground Rents Income Fund plc, Heather Wheeler MP, Taylor Wimpey

Contact LKP

Need help?

LKPhelp2The leasehold game is weighted against ordinary home-owning leaseholders, who aren’t professional players. LKP was set up to redress the balance, to help you win your disputes or at least avoid disasters.

If you have a leasehold problem, you can email sok@leaseholdknowledge or take a chance on calling 07808 328 230.

Or fill out this form, which ensures that you provide the essential information.

LKPnewsletter3

Professional services

The following advertisements are from firms that seek business from leaseholders. Click on the logos for company profiles.

Law

Right to manage

Lease extension / enfranchisement


capitalleasehold6-9ins

Insurance

Landscaping

limetree

LKP Managing Agents

Big managing agents are big because they have got business from developers or large-scale freehold owing companies. Doubtless they are very obliging.

Not a single one is big through consumer choice.

Managing agents accredited to LKP want business from leaseholders. Many are former leaseholders.

All have signed undertakings of good practice and have provided extensive references … from leaseholders.

They can also hand-hold leaseholders through right to manage at minimal cost.

Contact Sebastian O’Kelly at LKP for further details: sok@leaseholdknowledge.com, 07808 328 230

Please click on logos for link and details

Comments

  1. Patricia says

    April 1, 2018 at 9:20 am

    Should not the original owners who sold their properties at a discount because of the ground rent terms be the ones in line for a cash compo payment – some who bought second hand need compo if they paid the normal price but where they paid less then the first buyer should get the compo

    • Patricia says

      April 1, 2018 at 9:26 am

      On my estate there are buyers looking to hoover up these 10 year doublers offering tens of thousand less than their true value – I would not want these parasites gaining compo as well as buying the property cheaply

  2. ollie says

    April 2, 2018 at 12:00 am

    Its Heather Wheeler as Housing Minister who needs to go faster and propose the new policy :

    1. Dropping the 2 years qualification period and make the developers offer the sale of new property under leasehold title to buyers at Nil annual ground rent and Management Company shall be under the control by the leaseholders.

    2. Modify the “statutory 90 years lease extension” to cost not more than 10 x the first annual ground rent and let the freeholder claim any loss from the original Developer./Lessor

  3. Michael Epstein says

    April 2, 2018 at 7:36 am

    Ollie,
    I can see a case for a two year qualification for an individual to purchase a freehold on a new development. However, I agree that the purchase price of any freehold should be restricted to ground rent 10 x.(whoever is the freeholder?).
    The only investor in a property should be the current leaseholder and no one else.
    It is not just the investment opportunities open to freeholders that is so monstrously unfair, We must not forget the revenue opportunities derived from holding a freehold as well that must be considered..

  4. Stephen says

    April 2, 2018 at 8:18 am

    Valuing a ground rent stream at 10yp is very unrealistic in today’s era of low interest rates

    10yp has been used to capitalise very small rents fixed some 30 yrs ago when interest rates were much higher

    In FTT Tribunal have been using 5% to 6.5% recently and very small rents have been capitalised at 10%

    Are you seriously suggesting that a lessee of a 25 yr lease remaining paying a pound a year should acquire the freehold for a tenner ? So all the work on relativity would be rendered a pointless exercise – that would clearly not happen as that would produce wholly inadequate compensation for the freeholder and would result in a challenge under European Human Rights Act .

    There is certainly a case for long leases being valued using prescribed variables and thus saving the lessee many thousands in near pointless valuation fees and unnecessary legal costs

  5. Michael Epstein says

    April 3, 2018 at 9:10 am

    Why should speculative investors in freeholds profit at all at the expense of leaseholders?
    Why should speculative investors in freeholds receive compensation?
    Leaseholders receive no compensation when their lease runs down?
    I didn’t see many speculative investors in freeholds bemoaning the inherent unfairness to leaseholders?
    The origin of the payment of ground rent was purely to maintain the difference between the freeholder and leaseholder. It was an annual payment that recognised that the land a property was situated on belonged to a freeholder.. This is why so many payments were set at “Peppercorn” rates. It was a symbolic payment
    Now of course speculators and spivs have seen ground rent as a valuable artificially created asset base for which leaseholders can be ruthlessly exploited to derive income.
    Speculators investors in freeholds have got away with their scams for far too long..
    If they now are set to lose their prize assets, if they are now set to lose their ability to appoint crooked and corrupt managing agents, if they are now set to lose their ability to stitch up leaseholders with upwards of 40% undisclosed commissions for insuring property, if they are now set to lose every penny they have (sorry I meant borrowed) if they are now set to go bankrupt, TOUGH!
    Few will weep for Longharbour, Tchenguiz Family Trust or financiers such as Rothesay Life.
    And you know what?
    The collapse of the current leasehold system will result in a massive boost for the UK economy.
    Instead of thousands of pounds disappearing to an off shore tax avoiding company,former leaseholders will be able to spend that money in the economy (and tax will be paid)

    • Sebastian OKelly says

      April 3, 2018 at 9:23 am

      I agree on all points – and I am not picking up any great concern in government to go soft on investors in residential freeholds.

      On the contrary, the view is more that these outfits have taken society for a ride: exploiting the Help To Buy cheating; cheating homebuyers; speculating in people’s homes.

      It is time government and regulators are feared by (grubbier) capital, because things are not in balance.

  6. Michael Loveridge says

    April 3, 2018 at 12:46 pm

    “Are you seriously suggesting that a lessee of a 25 yr lease remaining paying a pound a year should acquire the freehold for a tenner? ”

    No, of course not – nobody has suggested that a lease that has only a short time to expiry should be valued in that way.

    But the vast majority of these lease were for 999 years, so if the lease has more than, say, 100 years to run then yes, the freehold should be valued at a realistic amount.

    The Tribunal already recognises that the cost of collecting such small ground rents is so disproportionate that the freeholds effectively have no value at all.

    I took a couple of cases to the Tribunal a couple of years ago where the ground rents were £25. The decided prices for the freeholds were around £350. But in order to reach this decision the amount of work involved was completely ludicrous. Fully qualified valuation surveyors underwent the solemn ritual of spending an afternoon travelling to carry out an examination of two bog standard houses. The hearing itself then employed a full time Judge and another qualified surveyor to prepare a 3 page judgment – all for the princely sum of £350!

    The poor leaseholder ended up having to pay two lots of legal costs plus the landlord’s surveyor’s fees, the total of which considerably exceeded the actual price of the freehold. Not only that, but the cost to the taxpayer of running this absurd exercise must have been massively out of proportion to the tiny sums involved.

    This procedure is completely unfit for purpose in relation to small ground rents. It’s like using a top surgeon and his full surgical team to put a plaster on a cut.

    There should be a fixed formula for any ground rent of, say, £250 or less, with the figure set every couple of years to reflect prevailing interest rates at the time but also taking into account the admin costs of the freeholder in collecting the rents.

    I would therefore suggest that freeholds yielding less than £10 a year should be deemed to have no value at all, with rents of up to £250 being valued at 15 times the rent.

    This would eliminate the need for – and the cost of – utterly pointless valuations, and the freeholder’s legal costs should also be fixed at, say, £250 + VAT.

    What’s so difficult about that?

  7. Stephen says

    April 3, 2018 at 2:10 pm

    I agree with you. Seeing a Tribunal discuss a ground rent of £10 to produce a result of a few hundred pounds is a waste of resources and achieves nothing

    I believe the formula to be the ground rent less a collection cost and then the net figure is capitalised at a discount rate which is composed as follows

    Risk free rate plus the risk premium. Ground rents are at risk of inflation if not hedged so the risk premium should be the long term inflation rate plus the risk of non collection and the risk the property ceases to exist

    Inflation is running at a long term rate of 2.5% and the other risks probably amount to a further 9.5% the risk free rate (The Ogden Rate) which is set by the government was minus 0.75% so overall a risk free rate for a non indexed rate should be around 2.25% but the collection costs need to be factored in and I would have thought £25 minimum would be not unreasonable. Therefore very small rents are not worth anything but a rent iof say £1000 per annum would be

    • Stoehen says

      April 3, 2018 at 3:34 pm

      The collapse in interest rates has helped investors in ground rents . Years ago they were purchased for 5yp now because interest rates are so very low multiples of 25-30 upward are paid or a percentage of the enfranchisement price

      However let it not be forgotten that the leasehold has also benefited typically in London in the collapse in interest rates

      The housing market even in London is in decline and it is only a matter of time before interest rates have to come back to more normal levels even more so if Trumps tariffs kick in. Then much of the gain made by freeholders will be reversed

      • admin says

        April 3, 2018 at 4:20 pm

        Leasehold was being reformed when interest rates were very high: ie 1993.

        That is when it was decided that a group of private citizens could compulsorily purchase the property of another citizen with enfranchisement.

        In the leasehold sector, one scam closes and another opens up.

        If people have speculated into private individuals’ homes and it doesn’t work out, we are mellow with that.

      • Michael Epstein says

        April 3, 2018 at 6:27 pm

        Stephen, Irrespective of low interest rates benefiting a freehold speculator or higher ones seemingly benefiting the leaseholder is to me totally irrelevant.
        The notion that an outside party can invest in a another person’s home solely in order to make money from that person’s home is frankly revolting..
        There is simply no excuse for this form of financial bondage leaseholders find themselves in due to the myriad of unscrupulous wide boys,who know how to turn a profit and can only squeal when their scams come crashing to earth.
        The entire planet(with the exception of England & Wales) has managed perfectly well without leasehold.
        As for the crocodile tears about tribunal costs for ascertaining a suitable payment for extending or buying leases nothing stops a leaseholder/freeholder reaching an agreement?. So you were not compelled to go to the tribunal, and you could have avoided all the extra expense.
        But you know what? Would you believe it that some freehold investors will weaponise valuations (even if they basically agree) purely to add so much expense that the leaseholder is scared off?
        As for the nonsense about those with 25 years of a lease remaining, simple solution, just extend the lease (at no charge)

  8. Stephen says

    April 3, 2018 at 6:20 pm

    I would too be mellow if the compensation is based on a discount rate reflective of the risks involved in holding that stream of income

    The idea that a discount rate of 10% being applied by Justin Madders reflects some punishment for the wrongs of a few . The capitalisation rate for a rent of something of the order of £250 fixed should be around 25-28yoo after factoring in collection costs.. it is a function of interest rates and if ling term interest rise then the multiple will fall.

    The reversion is a different matter and if someone buys a 99year lease is it patently obvious that the flats value will decline over time and if the term is extended a premium is fair and reasonable to expect

  9. Michael Loveridge says

    April 3, 2018 at 6:57 pm

    “As for the crocodile tears about tribunal costs for ascertaining a suitable payment for extending or buying leases nothing stops a leaseholder/freeholder reaching an agreement?. So you were not compelled to go to the tribunal, and you could have avoided all the extra expense.”

    I’m not sure if this is aimed at Stephen or myself, but either way you have to realise that the leaseholder often has no choice but to go to the Tribunal. In many cases the freeholder will either refuse point blank to negotiate or will demand extortionate prices.

    In both the cases I mentioned the freeholder steadfastly refused all attempts to negotiate and forced my clients to go through the whole ridiculous procedure.

    Of course, freeholders shamelessly exploit the absurd complexity of the system. They know that it will cost well over £1,000 to go to the Tribunal, none of which can be recovered, and they will therefore offer to sell the freehold at, say, £900 more than it’s worth as the leaseholder will still be £100 better off and may well choose that option.

    In situations like that the Tribunal Rules should adopt Part 36 of the Civil Procedure Rules, so that if a reasonable offer from the leaseholder is refused, thereby forcing them to go to the Tribunal, and the freeholder ends up getting no more than they’d been offered at the outset, they should have to pay all the costs of the leaseholder on the basis that they acted unreasonably in refusing the offer.

    • Stephen says

      April 3, 2018 at 8:42 pm

      For leases above 125 yrs and outside the highest council tax banding a prescribed formula for the valuation of the rent should be simple enough. The reversion will be very small and should be excluded so as to make the government stated object of making it quicker and. easier for lessees a real possibility and the savings in professional fees will be significant and again meets what the government wants

      For flats in the twilight zone of 80-125 years again the capitalisation rate could be prescribed and based on council tax bandings a value for the property can be determined and discounted at the 5% rate . The crude approximation on value afforded by using council tax. bandings will again save on professional costs

      For those below 80 yearsagain we could have prescribed rates and defined relativity. Greater precision in value would need to be achieved and possibly a prescribed limit in costs again linked to council tax banding

      The premium produced to be binding but if either party objects off the the FTT with Michalels idea about costs

      At the very top end particularly in Prime Central London I don’t think these rules would be appropriate but for the vast majority the results would fair

      I have done hundred if lease extension calculations over the years and it most certainly is not rocket science. It is an ideal exercise designed to generate fees for professionals who claim to see the whole leasehold system as corrupt but hope to god that life continues as is with only modest changes .

    • Michael Epstein says

      April 3, 2018 at 9:53 pm

      Michael Loveridge,
      For the avoidance of any doubt my remarks were aimed foresquare at the freeholders(and not at leaseholders) who force leaseholders to the tribunal, knowing full well that costs can be ruinous and are only payable by the oppressed leaseholder.

      • S McDonald says

        April 5, 2018 at 8:10 am

        In Northern Ireland and Scotland the freehold can be purchased for 10 times the ground rent. I see no reason why this could not apply to England and Wales. It removes uncertainty about what is payable. Lease extensions (while we are in the process of abolishing leasehold) could work on a similar but smaller multiple. It is a human right to be able to own your property. Commercial interests are secondary.

        • stephen says

          April 5, 2018 at 10:40 am

          Simplistic formula being a multiple of the ground rent will not however take into account the value of the reversion. Otherwise a lessee of a 25 year lease paying a ground rent of £1 would get the freehold for £10. It would not be fair on the landlord or indeed the lessee who may have sold it to the current lessee at a discount to reflect the short lease

          After 25 years of Tribunal Cases it should now be possible to come up with a prescribed discount rate for income. We know that the reversion is discounted at 5% after the Sportelli Case. Relativity again after all the numerous cases in 25 years should now be capable of being prescribed certainly for modest value properties. Prime Central London will be different and I don’t think that can be prescribed.

  10. Michael Epstein says

    April 5, 2018 at 8:58 am

    S McDonald.
    You are so right. Why should a third party be able to profit from anyone’s home?
    You can have all the safeguards needed for developments/blocks of flats supposedly afforded by leasehold under a commonhold system. The difference being that commonhold denies the opportunity to freehold speculating spivs to create an artificial market in which they can flourish.
    It is unbelievable that in this day an age for an investment of approximately 15% of the total property valuation a third party came make such profits from leaseholders who have paid out 85% of the value only to be allowed to occupy the property for a set period of time. That. the speculators have worked out a system in which they borrow the funds to purchase the freehold, then effectively appoint themselves as managing agents .and divert managing agent profits back to themselves in order to pay for their initial loans taken out to purchase the freeholds is beyond parody.
    In an act of desperation, these companies are now claiming that only “we know how to look after a development, leaseholders would not be able to do so?”

  11. stephen says

    April 6, 2018 at 10:45 am

    I notice Philip Rainey QC who is very much in favour of leasehold reform and well respected by the LKP argues successfully a discount rate for an indexed rent which is reviewed every 15 years at a capitalisation rate of 3..35% i.e. about 30Years purchase

    CH1/21UC/OCE/2017/0025
    CH1/21UC/OCE/2017/0026
    CH1/21UC/OCE/2017/0029

    Presumably a 10 year RPI clause would be capitalised at an even lower rate resulting in a higher years purchase

    If the likes of Mr Rainey believe its 3.35% off an RPI ground rent I don’t see how 10YP suggested by Mr Madders is going to get any traction

    • David McArthur says

      April 6, 2018 at 11:03 am

      Stephen, Michael Epstein’s post above makes the simple and unambiguous statement “Why should a third party be able to profit from anyone’s home?” All of your sophisticated (comes from the word “sophistry – “the use of clever but false arguments, especially with the intention of deceiving”).arguments fool nobody. Which part of Michael Epstein’s statement do you not understand?

      • Stephen says

        April 6, 2018 at 3:45 pm

        A person should not gain from someone home unless the arrangement is disclosed prior to that person acquiring the property

        • Michael Epstein says

          April 6, 2018 at 6:15 pm

          No Stephen, That is akin to saying that provided a burglar informs a homeowner as to “how much they are going to steal” that is all right!
          If I am a leaseholder of a property what gives you the right or sense of entitlement to profit out of my home?

      • Stephen says

        April 7, 2018 at 3:04 am

        Leaving aside mortality

        If the lessee takes in a lease and pays the rent for say 99 years and the property reverts back to the freeholder – has the freeholder profited from the deal – I would say no- he gets back what both parties expected to happen

        Where he may profit is if the lessee wants to change the terms and ask for a lease extension. As this is not what the agreement was at outset then why shouldn’t the landlord gain in such circumstances

        The lease allows the lessee to sell his interest to another party and the landlord equally is able to do the same

        Has not the law overs the years really favoured the lessee by giving him a right to enfranchise or extend the lease – terms not automatically provided for in the lease?

        • Michael Epstein says

          April 7, 2018 at 6:26 am

          Stephen, Did you really suggest that the freeholder does not profit from a 99 year lease? He profits from granting the lease does he not? He profits from ground rent payments does he not? He profits from undisclosed commissions (on such things as insurance) He profits from making the leaseholder pay all the maintenance charges. He profits from covenant charges. He profits from administrative charges. And when the 99 year lease is up, he gets the property back
          Whereas a typical leaseholder will take out a 25 year mortgage some of the more notorious freeholders will take a mortgage over 150 years! And if as you claim a 99 year lease shows no profit why is the income derived from leaseholds treated as an asset that can be borrowed against?
          Why do you think leaseholds are for such a short period? After all, why not standard 999 year leases? Most leases are for a standard 125 years. This means that within 25-30 years (when the mortgage is paid) it is time to extend the lease. and if you leave it for 40 years the leaseholder experiences a catastrophic loss of value? Why do you think it is that freeholders do their utmost to do a statutory 90 year lease extension?
          You argue on the basis of reversion values, compensation for investments etc? Not one of your posts has ever put forward the need for leasehold? Rather like the developers(some of who have admitted doubling ground rents were an error) they fail to answer as to why houses were sold as a leasehold at all?
          So come on Stephen, let’s have an answer?
          Why should you Stephen, be able to profit from me, Michael out of my home?

          • Michael Epstein says

            April 7, 2018 at 6:47 am

            Typo! It should have read “Why do think it is that freeholders do their utmost to “AVOID” doing a statutory 90 year lease extension?

          • Stephen says

            April 7, 2018 at 12:02 pm

            If you enter into a transaction where the term is stated to be 99 years and the ground rent £250 per annum linked to the RPI . If that is clearly disclosed to you why is it seen as profiteering that after say 25 years you want a lease extension and a premium is sought . You want to set aside an agreement and it is only reasonable that you should pay for that

            The root of the problem is that the NPV if the rent is never shown next to the premium and further the implications of leasehold and its diminishing value is not explained to buyers, many of whom are naive . If properly explained they could vote by not taking up terms and instituting they want say 999 years at sabres peppercorn but in return paying more for the property

            In a free market economy such as ours as long as there is transparency in the deal a vendor should be able to offer whatever terms they want and it is upto buyers to either agree or negotiate the terms they want

          • David McArthur says

            April 7, 2018 at 12:20 pm

            Stephen, “naïve”? This from Crispin Blunt (a true blue Tory), “Government should ‘nullify’ ground rents. End ‘feudal’ leasehold. Bring in commonhold. And stop developers’ and solicitors’ ‘unconscionable’ cheating of the NAIVE”.

            Crispin went on to say this, ““Present-day “onerous ground rents” are, more likely than not, the resultant of unconscionable conduct carried out by one sector of society who have superior information flow (developers, freeholders’ funds, financiers, solicitors) at the expense of an unsuspecting and more naive part of society (consumer homebuyers).”.

            Free market economy? If you want laissez faire, you can have it. There are more peasants than barons, and peasants can be nasty creatures when roused.

            No justice, no peace.

        • David McArthur says

          April 7, 2018 at 11:14 am

          oops, I thought Stephen’s opening was, “leaving aside morality”. Talking of “mortality”, leasehold will die it might take a Labour government to deliver the coup de grace, there are too many vested interest within the Tory Party.
          I worry not for Stephen’s future. When the scam that is leasehold ends, there will be other outlets for entrepreneurs (pejorative word), and they will still need lackeys like Stephen.

    • martin says

      April 6, 2018 at 6:52 pm

      Philip will argue the case for his client but that does not establish what it might be concluded the correct rates under the existing system let along any future system that might emerge. Like all good barristers, I would also be fairly certain Philip could argue for a different rate or different model for a different client.

      In much the same way Justin Madders set out a potential alternative model which if taken further would certainly have considered the impact of short leases and not resulted in a model where someone with a lease of 40 years might enfranchise for little more than a peppercorn.

      What is clear is that over recent years a number of freehold reversions have become nothing more than financial instruments where investors speculate on the value of future incomes. These investors have often added little if any benefit to the sites concerned and instead have sought to burden them with the other income streams currently available to the market such as very high insurance commisions and the growing tend in increased administration fees.

      At the moment there are many options of how a new model might develop including those not based on the existing valuation model. Much like Ratners things can go down as well as up so why should it be assumed there is a right to certain valuations just because that’s how the market has developed over recent decades. Not fair may be the claim of landlords but are their rights any more justified than those now burdened with the much-increased costs of recent valuation decisions or the move to leasehold houses which the government proposes to ban.

  12. Alec says

    April 8, 2018 at 8:27 am

    “a person should not gain from someone home unless the arrangement is disclosed prior to that person acquiring the property.”
    Stephen, April 6 @ 3.45 PM

    Exactly, which is why the Housing Act 1996 criminalised breach of right of first refusal in the first place. Failure to issue s5 notices (or post sale s3A by buyer) is such criminal breach.

    This applies to the sale of ground rent portfolios without prior knowledge of qualifying leaseholders. To date, the “we buy ground rents” brigade has thrived on general leaseholder ignorance of existing law.

    We wait for the Law Commission report and Sajid Javid to end this systemic criminality forthwith.

    • David McArthur says

      April 8, 2018 at 11:44 am

      Alec, our friend(?), Stephen, constantly peddles the line that contracts are sacrosanct. They are not, only the wilfully ignorant are unaware that contract terms MUST be fair for contracts to be binding.
      That is by the by anyway, Crispin Blunt MP pointed out there has, effectively, been a professional conspiracy of the informed and knowing against the ill-informed and unknowing common man (house buyers). This conspiracy involves solicitors who should have been acting for the common man. I would go further, It also involves governments which have consistently failed to act and have been the enablers.

    • Michael Epstein says

      April 8, 2018 at 6:23 pm

      Alec,
      Unfortunately the right of refusal legislation is all too easy to evade.
      All a freeholder has to do is to set up a freeholding company and sell the company that owns the freeholds as opposed to selling the actual freehold. Either that or they can sell freeholds to “connected companies.

      • Stephen says

        April 8, 2018 at 7:27 pm

        But the lessees have the right to purchase the freehold at any time there is no qualifying period for collective enfranchisement and as freeholders have been selling for around 100% of the enfranchisement price the lessees are not losing anything significant if the RFR is avoided by sale of share capital

  13. Alec says

    April 9, 2018 at 8:47 am

    ME: As you say right of first refusal is “all too easy to evade”. . However,, it nonetheless (and no less) remains criminal.

  14. stephen says

    April 9, 2018 at 3:33 pm

    Is there any point to Section 5 and the RFR. This legislation was introduced in 1987 and since 1993 lessees have a right to acquire the freehold either to their house or in the case of flats through collective enfranchisement.

    As noted above sales of freeholds tend to be very close to the enfranchisment price so if the legal costs and surveyors costs in an enfranchisement were capped then the lessees really won’t be losing out if Section 5 was abolished

  15. Alec says

    April 10, 2018 at 8:36 am

    Wrong, Stephen, very wrong. The ground rent portfolio sales, to which I refer, complete far away from prying eyes; including qualifying leaseholder’s. eyes.

    Hence the following clause in a Share Sale Agreement::

    “No announcement shall be made by any party in connection with this agreement without the prior written approval of the other.”

    Why would a property company create a non-disclosure clause in respect of its own associated company?

    And why would it be necessary for the same company to undertake as follows:

    “…in consideration of the completion today……………..of a Share Sale Agreement and (concurrent/separate) Property Sale Agreement, (the seller) undertakes as follows:

    1. To ensure that all applications to HMLR to register………………………….as proprietor with Title Absolute free of any mortgages etc……………..are lodged (at the LR) forthwith.!”

    Answers to the above are provided by the Share Sale Agreement which shows that at the time of the sale of the share(s, the land in the title had NOT been transferred to the associated company and only took place after the Seller had separately secured the purchase price through the Property Sale Agreement for the Freehold Title from the Purchaser (unrelated).

    In this case,, the seller entered into an agreement with an unrelated purchaser to (i) transfer the share(s) in the associated company and (ii) the land to the associated company, on the basis that the transfer of the land was always conditional on the purchase of the share(s) by the unrelated purchaser. The subsequent transfer was NOT to an associated company as the seller, up to the time of the transfer of the land, held the share(s) in its own associated company as a fiduciary for the unrelated purchaser.

    Now why would a Seller and a Buyer conspire and go to such lengths to create and deliberately hide such a transaction.?

    It is precisely because the purchase price for the freehold title was NOT close (or even “very close” to any enfranchisement price as Stephen might have us believe.

    In such circumstances, RFR is breached and remains breached indefinitely entitling the majority qualifying leaseholders to purchase the freehold on like terms to the original (criminal) disposal.

    It is this criminal trade, particularly in portfolio properties approaching the 80 year remaining mark, that has enabled a small band of unscrupulous freeholders to trample the law underfoot and over time commit a vast fraud on gullible and vulnerable leaseholders.

LKPnewsletter3

Tweets by @LKPleasehold

Essential reads

  • Sir Peter Bottomley
  • Martin Paine
  • Roger Southam
  • LKP full archive
  • Most damning LVT ruling ever made
  • Pensioners win £68,500
  • Benjamin Mire
  • Moskovitz / Gurvits
  • Plantation Wharf
  • Peverel Cirrus story so far
  • Sean Powell
  • Tchenguiz
  • West India Quay
  • Essential guide to lease extensions
  • Forfeiture
  • Press
  • Right to manage and taking control

News archive

Donations to LKP will be doubled by PayPal through December (up to £1,000 per donor)

LKP moved its charitable donation provider in the summer when BTdonate came to an end. We now only use PayPal as a portal. We do so as many other charitable payment portals charge quite high fees. Throughout December PayPal is prepared to match any donation to LKP up to £15,000, and £1,000 per donor. So […]

Leaseholder of £3m pad in central London demands £100 a day off Gerald Ronson for no internet  

By Harry Scoffin A millionaire travel tycoon has marched his freeholder to court over a failure to provide internet to his luxury flat in The Heron, Barbican. Stephen Shalson, 70, moved into the apartment in London’s Square Mile in February 2014 and claims he had to endure “about a thousand days” of non-service. He says […]

Cladding site? Come to parliamentary meeting on January 9 … and get your MP to attend as well

[The response form had a glitch. Now fixed] By Sebastian O’Kelly LKP director The Leasehold Knowledge Partnership is holding a parliamentary meeting at Westminster on January 9 at 5pm to address the cladding crisis. It is clear to LKP – and should be to officials and ministers – that thousands of flat owners living in […]

LKP trustee Professor James Driscoll dies

LKP sadly announces the death of one of its trustees, Professor James Driscoll. James was a solicitor, an academic, an author and a mediator. For eleven years he sat as a judge on the First-tier Tribunal (Property Chamber). Siobhan McGrath, President of the Property Chamber said that “James had been a talented and popular Judge […]

Does Li Ka-shing own your Adriatic freehold, or Hutchison Whampoa, or billionaire Frank Sixt, or Astor? Only Long Harbour knows, and it’s not saying …

The secretive Long Harbour fund came under further scrutiny today, with an article in The Times on leasehold house owners in the north-west mounting a collective challenge for their freeholds. But who owns these freeholds, where the beneficial ownership is hidden behind nominee directors of a company secretary group headquartered in Jersey? Families challenge Long […]

Families challenge Long Harbour for freeholds to Bellway leasehold houses, The Times reports

Seventy families in Ellesmere Port in Cheshire are locked in a battle to gain the freeholds to their Bellway homes that were sold off to William Waldorf Astor’s secretive Long Harbour fund, The Times reports today. Katie Kendrick, co-founder of the National Leasehold Campaign and LKP trustee, has organised her neighbours to demand the freeholds. […]

Cladding victims now being hit by insurance hikes, reports BBC R4 You and Yours

By Harry Scoffin The cladding crisis has rippled through the insurance market, with leasehold tenants in dangerous apartment buildings “being hammered” by “inflated bills”, BBC Radio 4’s You and Yours programme was told yesterday. Lessees of flats in Birmingham’s Islington Gates, a mixed-use development with 144 properties wrapped in Grenfell ACM (aluminium composite material), claim […]

Grenfell United link up with leaseholder groups to protest cladding crisis and warn next government of Grenfell 2

By Harry Scoffin Survivors of the Grenfell Tower fire have this week joined forces with leaseholders stuck in privately-owned blocks clad with deadly combustibles, telling the major party leaders of their “deep and grave concern that a Grenfell-like fire is going to occur again”. In a letter sent on Tuesday to Boris Johnson, Jeremy Corbyn […]

Martin Lewis, the Money Saving Expert, challenges party leaders over leasehold scandal

By Harry Scoffin Consumer affairs champion Martin Lewis (above) has challenged the major party leaders to explain their policies on leasehold as part of an online election debate. Election 2019: The MSE Leaders’ Debate It’s the biggest consumer decision most will make in 2019. While it’s important to factor everything in, voting to choose who […]

Would you want your former Prudential pension invested in Tchenguiz ground rents by Rothesay Life? FT reports concerns

The Financial Times has reported concerns about pensions invested by Rothesay Life in the ground rent portfolio of Vincent Tchenguiz. Rothesay Life has loans of some £1.7bn to the Tchenguiz interests, which are secured against ground rents that are paid annually by residential leaseholders. UK regulator under fire over £12bn annuity deal The UK’s Prudential […]

Why AN14 is making your cladding flat impossible to sell

By Martin Boyd A growing number of leaseholders are discovering that selling their flat has become more difficult. Prospective buyers need to obtain a valuation for their lenders. Now, on thousands of homes, this may mean they need something called an ‘Advice Note 14’ (AN14) report and it many cases these reports do not exist! […]

Supreme Court blocks enfranchisement ploy that seems to be pure enrichment

The legal somersault that is lease enfranchisement – the right of a private individual compulsorily to acquire the property (the freehold) of someone else – has come under the scrutiny of the Supreme Court. Hautford Limited owned the lease of a six storey building, which could be either residential or commercial depending on the consent […]

‘You weren’t mis-sold your leasehold house and I am keeping my £45m bonus’, is the message of Persimmon CEO to Bluebell Meadow

Persimmon fatcat says he isn’t going to hand over freeholds at Bluebell Meadow … Even though taxpayers through Help To Buy subsidised these flawed purchases, which also helped make him a multimillionaire Persimmon CEO David Jenkinson, who received a controversial bonus of £45 million which saw his predecessor sacked, has said he will not be […]

Taxpayers funding two leasehold houses a day in 2019 through Help To Buy … despite government saying THREE times they should be banned

By Harry Scoffin Almost two years on from the announcement of a ban on the sale of new-build houses as leasehold tenancies, developers are continuing to cash in on the practice. According to government figures published yesterday, the first half of 2019 has seen Help To Buy equity loans taken out on 395 leasehold houses. […]

Retirement housebuilders will only reform when they are forced to do so, Lord Best tells property conference

By Harry Scoffin Influential crossbench peer Lord Richard Best told the Homes UK conference in London’s Excel centre yesterday that retirement housebuilders need to up their game following devastating reports last week in both The Times and The Guardian. Both newspapers drew on the work of LKP’s sister organisation www.BetterRetirementHousing.com to condemn dismal resale values […]

Developers can now seize FREEHOLD homes, reports BBC R4 MoneyBox in shocking expose of ‘fleecehold’

By Harry Scoffin Tens of thousands of consumer homeowners face having their freehold houses taken off them by developers if they “fall more than 40 days behind” on estate management payments, an investigation by BBC Radio 4’s MoneyBox has found. MoneyBox reported on Saturday that the number of houses subject to restrictive ‘rentcharges’ and estate […]

Only one Grenfell cladding site in line for taxpayer handout as December 31st deadline looms, reports BBC R4 You and Yours  

By Harry Scoffin Six months on from the government declaring that taxpayers would pay to save leaseholders from ruinous Grenfell ACM cladding bills, only 1 of the 86 sites has got to the first approval stage ahead of the December 31 deadline. Despite this dismal level of progress, a Ministry of Housing, Communities and Local […]

The Liberals (no, not those ones) register ‘severe dissatisfaction’ with Tory record on leasehold

By Harry Scoffin The Liberals, once the Conservatives’ main rival in British politics and the party of government during the late 18th and early 19th centuries, have launched a blistering broadside at the Tories over leasehold inaction in its 2019 election offering. The minor party, which opposed the 1988 merger between the Liberals and the […]

‘Get leasehold done’? Boris Johnson’s Conservatives repeat 2017 pledges in manifesto

By Harry Scoffin The Conservative party will implement plans to ban the selling of houses as leasehold tenancies and slash new ground rents to zero, it was confirmed today. The policies feature in the 60-page manifesto entitled “Get Brexit Done, Unleash Britain’s Potential”, launched this afternoon in the marginal seat of Telford. On page 29 […]

A consultation for leaseholders in Wales

The Universities of Bangor, Kent, and York have been commissioned by the Welsh Government to undertake research into the sale and use of residential leaseholds in Wales. As part of this research, they have designed an online survey of leaseholders in Wales. This survey aims to find out more information about: The type of property, […]

More Posts from this Category

DIrection

  • Log in
  • Entries feed
  • Comments feed
  • WordPress.org

Find Everything

Essential reads …

  • Ground rent scandal
  • Parliament
  • MPs’ APPG on leasehold
  • Benjamin Mire
  • Moskovitz / Gurvits
  • Oakland Court
  • McCarthy and Stone
  • Persimmon
  • Recognised Tenants’ Association
  • Cladding crisis
  • Canary Riverside
  • John Christodoulou
  • Peverel
  • Peverel Cirrus story so far
  • Charter Quay
  • Forfeiture
  • Plantation Wharf
  • Law Commission
  • Plantation Wharf
  • West India Quay
  • LEASE: what’s the point?
  • Tchenguiz
  • Sean Powell
  • Press
  • Exit fees
  • William Waldorf Astor
  • Martin Paine
  • LKP anthem
  • LVT/Property Chamber Survival
  • Most damning LVT ruling ever made
  • Pensioners win £68,500
  • Park Homes
  • Redrow
  • Retirement

Copyright © 2019 Leasehold Knowledge Partnership