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You are here: Home / Latest News / Housing minister Brandon Lewis meets LKP

Housing minister Brandon Lewis meets LKP

June 11, 2015 //  by Sebastian O'Kelly

BrandonLewisBrandon Lewis, the housing minister, this week met the Leasehold Knowledge Partnership /Campaign against Residential Leasehold Exploitation, accompanied by its patron MPs Sir Peter Bottomley and Jim Fitzpatrick.

The meeting covered the following:

Lease forfeiture: LKP says this nuclear weapon of freeholders should be ended as it can give rise to unjustifiable cash windfalls.

No one in leasehold attempts to justify the latter.

The case of the forfeiture of Dennis Jackson’s £800,000 Battersea flat at Plantation Wharf illustrates this.

The freeholder here was set to gain a windfall of £720,000, until LKP stepped in to reverse the forfeiture. More here

LKP said that it is urgently required to find out data on lease forfeiture from the Ministry of Justice.

This was requested by shadow housing spokesman Emma Reynolds in April, but it was supposedly too costly to provide the information. More here

LKP believes the courts grant lease forfeiture more frequently than is widely believed.

LKP wish list is to end leasehold tenure. Failing that, to ensure that all leases are indefinite in duration and that leaseholders – who overwhelmingly have the majority financial stake in a site – control the management of a block from the start.

The management should not be in the gift of the freeholder.

Leasehold residents need to be empowered from the start, avoiding the need for right to manage – where legislation needs firming up, to stop the incessant legal game-playing to thwart it.

Indeterminate leases would stop developers / freeholders working the system to gain from lease extensions.

Sebastian O’Kelly, of LKP, noted the Demos and Legal and General reports on the virtues of downsizing and a healthy retirement housing market.

But retirement leases of 125 years demonstrate how developers, and freehold purchasers, hold the whip hand.

“They won’t catch the first purchaser, possibly not the second one either, but will almost certainly catch out the third or fourth owner, he said.

Retirement leasehold owners routinely fail to extend their leases when they should (before 82 years) and the asset’s value drains away: as developers and the freehold owners knew all along that they would.

The trend of housebuilders to build leasehold houses which would formerly be freehold was deplored by LKP.

“This is catching out aspirant first time buyers who have spent many years in rented accommodation, only to find that they are only long term tenants in leasehold,” Mr Fitzpatrick informed the minister.

Related posts:

Two flats a year face forfeiture in constituency of housing minister Gavin Barwell Housing minister says LEASE must be on the side of leaseholders, and promises more money Default ThumbnailLKP meets shadow housing minister Emma Reynolds Roger Southam should not be LEASE chair, leaseholder tells housing minister Are half the right to buyers in housing minister’s Croydon constituency on housing benefit?

Category: Latest News, MHCLG, NewsTag: Brandon Lewis, Jim Fitzpatrick, Martin Boyd, Sir Peter Bottomley

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Reader Interactions

Comments

  1. Karen

    June 11, 2015 at 8:57 am

    This is welcome news regarding Brandon Lewis taking the time to listen to everyone’s concerns.

    I have managed to put off 5 young couples wanting to buy on various sites in my area, when I explained to them how leasehold housing works. These young people are vulnerable and when they see a ‘government backed’ new housing scheme they automatically think that it must be OK because the government are backing it…. how wrong could they be.

    I go out of my way to post on social media sites to warn people not to buy these properties and to tell their friends not to buy these properties but we shouldn’t have to do that.

    Life for our young people shouldn’t be like an assault course when it comes to buying a home,
    it should be black and white, no gray area’s or smoke and mirrors..

    What is absolutely staggering is the amount of time that goes into ‘dressing’ freehold house sales literature……….

    • chas

      July 3, 2015 at 8:30 pm

      Karen,

      Concerns raised about Peverel/Firstport managing, McCarthy & Stone (M&S)developments.

      The current situation as is understood is New Build M&S developments are not managed by Pev/Port. M&S sacked Pev/Port from all the developments where they owned the freehold.

      M&S have their own Managing Agents, a new M&S managed development may be a better prospect when purchasing a retirement flat, but take heed the value of some past M&S developments were overpriced some up to 40% above resale value???

      Check on the web and at with Estate Agents, beware no one will inform you of this

      In 2004/05 a relative purchased a 1Bed flat from a McCarthy & Stone, built circa 2003/04.

      The Development contained both 1 bed and two bed flats including a resident House Manager. As of today they have been without a House Manager for over 12 months. They have the same Senior Area Manager as us at Ashbrook Court.

      Flat Prices in 2004/05
      Bed 1 £139,000
      Bed 2 £188,000

      Flat Prices in 2015
      Bed 1 from £75,000?
      Bed 2 from £129,000?

      House Managers Flat Rent paid by residents £9,00.00 P/A is still being paid by all the residents.

      The House Manager living in the Flat, had been on long term sick from circa April 2014 before leaving in late 2014. To ensure that a House Manager was seen to be in place a Relief/Deputy Manager visits 2/3 days a week who receives circa £15.00 p/h.

      So not only will they pay the £9,000,00 rent but most of the £15,000 pay for the House Manager may be taken up paying the Relief/Deputy Manager.

      Any residents wish to comment?

      • chas

        July 9, 2015 at 2:29 pm

        Recently seen in Estate Agent window

        1 Bedroom Flat at Denehurst Court, Church Stretton. for Sale £71,000

        This was an ex McCarthy & Stone Development
        Managed by Peverel/Firstport.

        Another flat for sale showing how much in value these developments can loose.

    • chas

      July 9, 2015 at 10:52 pm

      This was posted on About Peverel which I believe is very relevant to Campaign against retirement leasehold exploitation AND LKP.

      Following years of disputes between residents of St Georges West, West Drayton, Middx, and the Consort arm of Peverel/Firstport (now known as Firstport Bespoke Properties) Peverel/Firstport via their retained legal gangsters JB Leitch decided to get heavy with the residents. So over a period of time they added administration charges in relation to serving a Section 146 notice , which is the precursor to forfeiture.

      This was despite the fact that their could never have been an intention to forfeit, as due process had not been gone through (forfeit being a final step not an initial one). It was also found that at the time the notice was served the residents service charge accounts were actually in credit. At the tribunal Peverel/Firstport claimed administration charges of £15,309,83. The judge at the tribunal was scathing in his comments about Peverel/Firstport.

      “We are satisfied that there has been a lack of transparency in the manner in which Consort (Peverel/Firstport) have maintained the service charge accounts. We have found it difficult to ascertain the true state of the accounts” . So, even the Upper Tribunal cannot ascertain the development accounts?

      The Tribunal expressed concerns that previously awarded refunds had not been credited to the service charge accounts. This was before a new managing agent described Peverel/Firstport managed service charge accounts as “meaningless rubbish!”

      The original claim as stated was £15,309,83.

      The Tribunal reduced this figure to £386.

      • chas

        July 10, 2015 at 11:07 pm

        Posted on About Peverel & Campaign against retirement leasehold exploitation

        Price Fixing. What Was It? And Why Did It Happen?

        First, a little understanding of the Tchenguiz business model is needed.

        In essence the property portfolio was built up on borrowed money.

        Tchenguiz realised that if the owner of the freeholds also owned the managing agent, the profits from the managing agents could be utilised to service the the loan repayments.

        In effect, residents would be paying back the loans granted to Tchenguiz, whilst he could spirit the profits off shore in the British Virgin Isles. In a sense it wass a super-sized Buy To Let scheme.

        For a while, this was a scheme that “couldn’t go wrong”. But it did go wrong, horribly wrong.

        Tchenguiz companies had started to default on loan agreements and inter-company cross guarantees.

        As interest rates rocketed to support the loans, so the need for Peverel to increase their income from residents became critical.

        As the holding companies edged closer to financial catastrophe, Peverel eyed up the millions of pounds in service charge accounts (which of course they could not touch).

        What they needed to do therefore was find a method of “liberating” service charge funds, so that they would end up with Peverel.

        Very senior managers at Peverel (many of which now run Freemont Property Managers) had a meeting at which it was decided that Retirement Developments that were around 20 years old could be targeted for the total renewal of Warden Call/Entryphone systems.

        The systems were to be declared obselete and beyond repair and would have to be replaced.

        Of course to benefit Peverel, their sister company Cirrus, would have to win the contract.

        Thus begun the price fixing scandal.

        Working in concert with other contractors, they arranged for those contractors to quote high, so that the Cirrus quote came in lower.

        So arrogant and so sure they would never be caught out, Peverel did not even bother to disguise figures, so many developments were price fixed by a straight 20% difference between the contractor and Cirrus quotes.

        In some cases the contractor quotes came in on Peverel headed paper!

        It is ironic to note that many of the relacement works were carried out by the price fixing contractors (who had been instructed to wear Cirrus uniforms)

        The profits from the price fixing (for work that was probably not needed) were used to support the collapsing Tchenguiz companies.

        Peverel admitted to the price fixing (after an article appeared in the Sunday Times)

        They have offered a “goodwill payment” to some of the affected developments, which is only a fraction of the money they defrauded residents of.

    • chas

      July 10, 2015 at 11:23 pm

      The SFO have advised that if any of the following are applicable to a company, it is very probable that fraud has taken place.

      Audit findings deemed to be errors or irregularities.

      Internal controls that are not enforced or often compromised by higher authorities.

      Discrepancies in accounting records and unexplained items or reconciliations.

      Missing documents, or only photo copied documents available.

      Inconsistent, vague or implausible responses arising from inquiries.

      Excessive voids or credits.

      Common names and addresses of payees or customers

      Alterations to documents (such as back-dating)

      Duplications(such as duplicate payments)

      Collusion among employees, where there is little or no supervision.

      One employee has control of a process from start to finish, with no segregation of duties.

  2. Nigel Inwood

    June 11, 2015 at 12:09 pm

    Well done for managing to talk to the Housing Minister. In my view the Law Society fails to regulate its members properly and that is the crux of the problem. Whatever forms of tenure and systems of justice are used, lawyers surely have to be regulated and act with honesty and integrity, or the thing will keep falling apart.

    I don’t know how the Law Society can allow such a free-for-all of exorbitant fees in residential lease matters, yet still justify self-regulation. In my experience there is no regulation by the SRA unless a criminal conviction is achieved against the lawyer first. I would therefore like to see funds raised for prosecutions in the worst cases. Naming and shaming is one thing, and very commendable, but if never backed up by a criminal conviction or two, we do little to deter those who cross the line between overcharging and extortion or fraud.

    • Karen

      June 13, 2015 at 10:47 pm

      Watch this space.. crowd funding in progress..

      • chas

        June 15, 2015 at 8:15 pm

        Karen,
        Wil be contacting you on my return re – Crowd Funding.

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