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You are here: Home / Latest News / Justin Madders launches Bill to end the enfranchisement and lease extension racket

Justin Madders launches Bill to end the enfranchisement and lease extension racket

November 1, 2017 //  by Sebastian O'Kelly

An attack at the heart of the monetising opportunities of the leasehold sector has been launched by MP Justin Madders today.

He is moving a ten-minute Bill to deliver justice for leaseholders by adopting a simple formula set out in law to buy freeholds without the need for protracted tribunals.

If adopted, England and Wales will come into line with Scotland and Northern Ireland in having a centrally imposed formula to decide the value of freeholds and lease extensions.

It would end the incessant horse-trading – and legal and surveying costs – which at exist at present to establish correct valuations.

The process is paid for entirely by the leaseholder, who has to pick up the freeholder’s legal and surveying costs as well as his own.

Mr Madders said today: “Abuses of the leasehold system have made huge profits for developers, while causing misery to thousands of people.

“Many owners of leasehold houses were led to believe that they were buying their dream home, but instead they were providing a revenue stream for an offshore company operating from a tax haven.

“The current system allows freeholders to delay and put off people who want to buy their freehold. The whole process is extremely costly, archaic and lacks transparency.

“Great expense is also incurred in just proceeding to a Tribunal to purchase the freehold due to the practice of freeholders using surveyors and lawyers to argue for unrealistically high costs to purchase the freehold.

“The system I am proposing removes the opportunity for them to do that: by creating a simple formula set out in law to purchase a freehold there will be no need to resort to expensive and time consuming tribunals.

“I hope that MPs from all parties will back these reforms, which would make a huge difference to large numbers of their constituents.”

A straightforward, cost effective and fair system would help the owners of leasehold houses to purchase the freehold of their home, and owners of flats where a majority of leaseholders within a block wish to purchase the freehold.

The new system for would be based on a simple calculation with a cap on the total paid for a freehold, and would replace the lengthy, complicated and expensive system of enfranchisement currently in operation. Similar systems exist in Scotland, Northern Ireland and a number of other countries.

Property tribunal upholds lease extension ‘scandal’ that pays millions to freeholders

The enfranchisement and extension racket has been exposed in the courts by chartered surveyor James Wyatt, of Parthenia, who has described it as “the biggest rip-off in leasehold”.

Last year he demolished the mathematical model dreamed up by chartered surveyor giant Gerald Eve that has established values for 20 years.

It was commissioned by the Grovesnor Estate of the Duke of Westminster. But Mr Wyatt failed to get his own leaseholder-friendly model accepted by the courts.

As a result, the issue is going to the Court of Appeal.

But were Mr Madder’s legally enforceable formula adopted, arguments would cease and freeholds would have to be sold to leaseholders for a sum without argument.

The new Bill also seeks to establish a new compensation scheme for those who have been misled into leasehold agreements and to change the rules around the award of legal costs in Property Tribunal cases, which Madders claims are “unfairly weighted in favour of the freeholder.”

The Leasehold Reform Bill is to be introduced through the ‘Ten Minute Rule’ procedure, which allows an MP to make their case for a new law. The process will start with a ten-minute speech by Justin Madders in the House of Commons on 7th November 2017.

The Government consultation, “tackling unfair practices in the leasehold market” closed on 19th September and proposed a number of measures including banning the sale of leasehold houses in future and limiting the ground-rent levied on other leasehold properties.

While Mr Madders, who is also the Deputy Chair of the All Party Parliamentary Group on Leasehold Reform, welcomed the Government’s proposals, he expressed concern that they did nothing to address the issues being experiences by existing leaseholders.

Mr Madders MP said: 

“While I welcome the Government’s proposals, they do nothing to address the injustice that current leaseholders face, many of whom feel trapped in properties with escalating ground rents because of the complexity and expense of the current system for purchasing freeholds.”

LKP says:

“Justin Madders is storming the citadel of the corrupt leasehold system, which allows murky and anonymous interests to make cash cows out of people’s homes and provides a gravy train for legal and property professionals, sometimes of dubious calibre and integrity.”

Related posts:

If government co-operated we could fix the leasehold scandal, says Labour MP Justin Madders Justin Madders: this could be called the Leasehold Emancipation Bill Justin Madders Bill: 10x annual ground rent and the freehold is yours … Anyone got a problem with that? Justin Madders delays Leasehold Reform Bill and calls on the Government to provide justice for leaseholders MP Justin Madders questions role of Roger Southam as LEASE chair

Category: Justin Madders MP, Latest News, News, ParliamentTag: Justin Madders MP

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Previous Post: « We are being ripped off by private estate charges by developers and property predators just like leaseholders, says HORnet
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Reader Interactions

Comments

  1. Ryszard

    November 1, 2017 at 5:22 pm

    This is by far the best development in the whole scandal. Big Kudos to Justin Madders and all those who simply understand, when the government shamelessly keeps dragging it’s feet and keeps launching consultation upon consultation. Time to act.

  2. Linda

    November 1, 2017 at 5:34 pm

    Justin madders is a superb MP , who has worked tremendously hard to bring this injustice to the public eye. Thank you so much for your never ending support !!!!!

    • SebastianOKelly

      November 1, 2017 at 5:45 pm

      Agreed. We could do with more like him.

      • Linda

        November 1, 2017 at 6:29 pm

        I for one will be pushing for my MP to back this reform bill , and I will be encouraging the rest of the NLC group to do the same

        • Kim

          November 1, 2017 at 8:31 pm

          Hurrah Linda. Please try and rally the NLC GROUP, all 8,000 to sign the blooming petition that their founder Katie Kendrick started. I know I keep banging on about this but I think it is absolutely shocking that not more of the NLC members have supported the petition. NO EXCUSES. It takes 30 Seconds to sign.

          Here’s the thing, If NLC members can’t be bothered to sign a petition that is integral to their cause then why the #u#k should the developers, venal Managing Agents, shady 2 bit solicitors et al give a F**#k about LEASEHOLDERS.? WAKE UP and sign the petition. If not then you you reap what you sow………

          APATHY IS A CRIME!, OK

  3. Paddy

    November 1, 2017 at 6:26 pm

    Oh please let parliamentarians just once lift their noses out of the trough to bring about meaningful reform such as this.

    Well done that honourable fellow.

    Lease extensions are a legalised rip-off, no happen-chance.

    The previous Acts were purpose designed to ensure leaseholders were exploited for as much as could be squeezed out of them.

    Why else have a sweep up “hereby declared” clause in an Act of Parliament that says:-

    “It is hereby declared that the fact that sub-paragraph (2) requires assumptions to be made as to the matters specified in paragraphs (a) to (d) of that sub-paragraph does not preclude the making of assumptions as to other matters where those assumptions are appropriate for determining the amount which at the relevant date any such interest of the landlord as is mentioned in sub-paragraph (1)(a) or (b) might be expected to realise if sold as mentioned in sub-paragraph (2).”

    Hereby declared, mark you. Just in case it might slip unnoticed. “Have a go at finding any other excuse to charge more. We ran out of ideas.”

    Read any of the tribunal cases on lease extensions and be amazed that this is how our judges spend their time without any apparent blushes.

    I fear there are too many landlords in that place, mind.

  4. cat

    November 1, 2017 at 7:52 pm

    we need radical change. this legal scam can’t go on. Scotland and N.I have introduced clear simple, afirdable and fair ways for people to free themselves from this scam. solution is simple: keep private law firms and surveyors away from us
    .and things will be fine. the whole process is a huge scam serving interests of law industry/business..

  5. Katie Kendrick

    November 1, 2017 at 10:56 pm

    I feel very lucky to have Justin Madders as my MP.

    He is a legend and not scared of speaking out for justice.

    This duo from Ellesmere Port are not going to stop until we get justice for all. !!!

    Hoping lots of MPS back this Bill on Tuesday. ALL leaseholders need to mobilise their own MPS to support it.

    PLEASE DO YOUR BIT!!

  6. David McArthur

    November 2, 2017 at 5:57 am

    This move by the communist Justin Madders is an attack on enterprise, and should be opposed by every decent god fearing member of parliament. I am so outraged I will be writing to my own MP about this.
    Okay, satire over with. Leasehold should not exist, the goal of LKP is to take leasehold laws of our statute books. That goal, with retrospection, will meet with fierce opposition from vested interests, and resistance from government. In those circumstances it is right that particular aspects of leasehold are targeted, but please do not forget, or be distracted, from the ultimate goal. As long as leasehold exists there will be angles and opportunities for exploitation. Leasehold must eventually be consigned to history. .

  7. Liz Clayton

    November 2, 2017 at 10:15 am

    As one of a group currently trying to buy our freehold, I can testify as to how loaded and complicated the system is! We have to pay a professional for a survey, which the freehold owner can ignore and demand almost double the value our professional recommended. Now the expensive bit starts with negotiations – in our case three lots of legal costs as our freehold owner appointed an interim landlord.
    If only we had the same system as Scotland and N Ireland! Our costs are likely to rise to a point where some of our fellow leaseholders have to drop out, putting our efforts at risk.
    Well done Justin Madders! I hope he has the full support of the APPG ( our local MPs are members) and something happens to benefit our fellow leaseholders in England and Wales!

  8. William Fence

    November 3, 2017 at 8:16 am

    Liz : the majority of freehold enfranchisements tend to collapse due to people being unable to get the money together, hence your best bet is to file a claim for statutory lease extension; if the enfranchisement succeeds your contribution will fall as there is virtually no reversionary value in your then extended lease. When the legislation came in, it was assumed that most leaseholders would organise to enfranchise for the freehold, however lease extensions are six times more popular than successful enfranchisements (if you tot up all the units concerned).

    • David McArthur

      November 3, 2017 at 9:53 am

      William, enfranchisement means buying the freehold? Statutory lease extension is self explanatory. Question, is there a cost to a statutory lease extension? Reversionary value is the value of a lease, short time left being more valuable than many years left?
      If I have understood the terms correctly then I understand the point you make about applying for a statutory lease extension before buying the freehold (enfranchisement).
      I love jargon, No, that understates it, I am enthralled, enraptured, in awe of jargon – not a criticism of you, William. You have simply, through necessity, educated yourself in this area. Last night I watched part of a programme on the BBC, its subject was the great gap between the few who have immense wealth, and the many who struggle to survive (I think that in essence was the subject). The jargon word “securitisation” raised its ugly head – now don’t take anything that follows as authoritative, my attention span for these things is somewhere far below zero. As I understood it securitisation was devised by a certain individual and was applauded by investors as yet another new fangled way to make lots of money, then it spun out of control and we had the great financial meltdown (the consequences of which we are still living through), due to securitisation.
      What then is “securitisation”? In this instance it was the bundling together of mortgage debt and the trading that followed. The problem was that much of this mortgage debt was of a “sub-prime” nature – another jargon word meaning high risk of default. So financial organisations were buying bundled debt without knowing the nature of the bundles.
      We have become too smart for our own good, time to embrace Pol Pot and his return to the year zero.

  9. Liz Clayton

    November 3, 2017 at 11:16 am

    William:
    Lease extensions are – at present, as we have fewer than 68 years on our leases – as expensive as enfranchisement and take as long. If we then proceed to enfranchisement , we will have to pay for a surveyor and the legal bills of all parties. Plus we will still be stuck with our management company, unless we pursue right to manage incurring yet more costs!
    Leasehold has us every which way, sadly.
    Liz

    • Kim

      November 3, 2017 at 6:52 pm

      Don’t listen to William , Liz Clayton, Listen to David Mc Arthur , you know it makes sense!

  10. ollie

    November 8, 2017 at 12:03 am

    Yesterday in Parliament,, Justin Madders MP has presented his bill to deliver leasehold reform .

    https://hansard.parliament.uk/commons/2017-11-07/debates/38F61C2C-78C2-4D8A-9820-58C4ED3C41B3/LeaseholdReform

  11. Wendy Stott

    November 10, 2017 at 1:27 pm

    Why “ten times ground rent”? Surely a fair price would be the price that the Freehold was sold to the investor for. The investors have already made enough money through ground rent charges.
    Investors knew that they were exploiting house purchasers.
    If a thief stole my phone, sold it to a fence for ten pounds who then offered it back to me for one hundred, that isn’t reasonable, (if they could be identified, then they would be prosecuted). Make separation of freeholds from property illegal, and demand that they be returned.

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