How impressed one has to be with the lobbying activities of the lawyers in ALEP: the Association of Leasehold Enfrachisement Practitioners.
It waives a piece of paper pointing out that the powers of attorney – for the incapacitated – do not apply in Landlord and Tenant Law and – in no time, it seems – we have a Leasehold Reform (Amendment) Bill going through the Lords yesterday.
LKP can only gape in envy. Every week we expose some anomaly or even blatant injustice, but we are still pressing our noses against the glass when it comes to:
- securing leasehold funds with some regulation;
- reverting right to manage to the no fault process that Parliament intended, before smart-alec lawyers like Justin Bates made it an issue of major litigation;
- stopping the creation of new leasehold altogether, in favour of the commonhold system the rest of the world (possibly excluding Hawaii) enjoy.
Fortunately, although the Leasehold Reform (Amendment) Bill did not offer much reforming, old friends in the Lords stepped forth to offer their two-penny worth.
Baroness Gardner of Parkes (Conservative) was off like a hare, pleased that the power of attorney issue was being addressed, surprised it had been neglected for so long and then adding:
“It gives us hope that someone is now looking at the problems of leasehold, which is crying out for reform.
Next week she is tabling a question about commonhold – reducing the 100 per cent agreement of leaseholders – but she used the occasion for a preview.
“For whatever reason, 100% agreement is impossible. If you have a crooked or sharp operator owning the head lease they could bribe one person to oppose the move, and everyone else’s hope is gone,” she said.
It is always good to hear politicians use words such as “bribe” in the context of leasehold, where a whole range of villainy hides behind compliant trade bodies, insincere repetitions of “transparency” and consumer charters and similar.
Trixie – the baroness is a former dentist from Australia, where she owns a flat under the strata system – rightly paid tribute to Mark Prisk, former housing minister, who was thoughtful on issues of leasehold (and has some truly poisonous examples on his doorstep in his Hertford constituency).
“I was sorry to lose Mark Prisk as Housing Minister, as he chaired an excellent roundtable meeting at the Department for Communities and Local Government last year. It was because of that that the redress scheme, which will come into force this year, has become law, and it will be of great value to many leaseholders. [LKP doesn’t think this initiative, dreamed up on the spur of the moment and added to the letting agents law, means much for leaseholders at all.]
“At that meeting was a huge range of people; it included organisations such as the Association of Residential Managing Agents, or ARMA, and ARLA—the letting one—LEASE, and Peverel, who were the villains of the piece but keep sending me letters and have now become angels.”
One assumes Lady Gardner was being ironical: Peverel is an angel with sticky fingers, and only two months ago was ruled by the OFT to have run a price–fixing racket over its subsidiary Cirrus.
After praising the Leasehold Knowledge Partnership – as well as the British Property Federation and others – for arguing that leaseholders should be covered in the government scheme regarding flooding insurance, Baroness Gardner ended in fine form:
“Leaseholders have suffered from crooked landlords not revealing that they are direct financial beneficiaries of contracts for insurance, building, management and all sorts of things. It is scandalous that the people who pay the bills have not been able to find out whether a huge rake-off from those bills has gone to a corrupt head lessee or freeholder …
“Peter Bottomley has called for failures in some extremely serious cases to be criminalised.”
Baroness Gardner has an ally in Lord Beecham (Labour), a former leader of Newcastle city council, who stirred the pot over commonhold:
“I wonder whether it is not time for the Government to review how the commonhold process is working. How many cases have there been where the right has been exercised and will any further changes need to be made in the legislation that permits commonholds to be created? The impression is that not very many have gone through, so it is perhaps now time, several years after the latest piece of legislation, for a review—although obviously not today. Perhaps the Government will look at that and give an indication of whether they might be willing to conduct a review or perhaps ask the Law Commission to do so.”
The full debate can be read here
Related posts:
Time to have another look at commonhold, say Lords. But what are Lord Best’s proposals?
LKP prompts Lords debate
Lords amendment sneaks regulation of leasehold managing agents into the Enterprise and Regulatory Reform Bill
20 MPs and Lords sign up for All-Party Parliamentary Group on leasehold and commonhold
Baroness Gardner raises issue of leasehold tribunal legal costs in Lords …
Corrie and footie stars may face £100,000 bill in epic battle to win right to manage at No.1 Deansgate
In all this screaming for commonhold, its far easier to simply require all new leases to be 999 years or “perpetuity -1 year” and remove forfeiture for ground rent and service charge. The fact is that millions of leaseholders still live quite happily under leasehold and the problem is where some landlords abuse the process and that extends from Peveral to councils and the dreaded dictatorship of the “residents committee”. Regulation and legislation can eliminate that scope for abuse, rather than turn flat ownership on its head in a “tail wags dog” debate. If RTM isn’t possible in some cases then the option to appoint a trustee should be created.
Sadly reducing commonhold to <100% is impossible, it is contrary to English law to compel a person to undo a contract that they have entered into.
Moreover CH agreements are still contracts and will contain much of the same terms as leases and create the same problems on service charge and work and costs with no ability to go to the FTT to determine them. The grass is greener in that ownership is permanent, but its just as hard to keep it green.
AM, the Tribunal already has the powers to vary a lease so it is not quite true to say changing a contract someone has entered into without their agreement is contrary to law.
Nobody is suggesting commonhold does not have its own problems. Bu it is at least the owners who are deciding to make a mess of their lawn rather than some third party who’s only interest is making money for themselves.
But that is just as problematic as any practitioner knows. I have lost count of the residents groups that have turned up in a pickle ,lost their company and freehold, or made bizarre decisions, in one case leading to subsidence in 3 blocks ,not to mention those that ripped off their fellow owners..
Variation or a dispute in a contract is very different to undoing, removing one contract and replacing it with another.
The problems of LH and CH are very much the same but the differences revolve around forfeiture and control. The latter is easy to fix, as above but control is quite another. In a new build its just as easy to say that the FH or at worst say an HL is passed to the owners who get 999 year lease so they get control, forfeiture free long leases under their control. No need for CH.
Even if CH is applied to existing or new build you do appreciate that the developer can still grant leases to the common areas and staff flats leisure areas etc and charge a rent from the CH association even while making it their responsibility to look after them?… E.g. House manager flats lease is granted, out of the “commonhold in freehold estate” title, to “ABC Flats no x holdings” for 999 years at a peppercorn rent and an FRI sub lease to your “ABC flats commonhold association ltd” at “market rent” subject to reviews? Your CA articles and assessment and commonhold unit agreements are drafted to include that payment.-just like a lease- and your CA is entitled to provide that service?
As a leaseholder I am an 100% in favour of commonhold and regard it as the ultimate destination for our block. We’ve achieved right to manage, have started on the freehold, and after that will be commonhold, as soon as the law and the level of participation permits.
The shortfall from 100% arises not from opposition to commonhold or to any variation in leases or contracts but from the fact that a proportion of owners, in London especially, are offshore owners whose London property is just another asset class. They couldn’t give a fig about the taxpaying London owner-occupier or UK investor and take no interest in any operational matters whatever–not even the most egregious rip-offs. (Perhaps it’s like pointing out a dollar bill on the ground to Bill Gates?)
AM’s posts here reek of vested interest (a freeholder as well as a managing agent I suspect). As for perpetuity minus a year, it appears on the face of it an absurd idea and I suspect is likely to be of zero practical interest to anyone.
Developers cannot grant new leases if they are not legally allowed to do so, as they are not in the US, Canada, Australia, Ireland, South Africa and all the other countries that inherited leasehold from English common law and then got rid of it, recognising it for the feudal anachronism that it is.
I might add that for those with a vested interests, there is a lot of money to be made if CH is widely adopted. As its broadly new ground legally, any disputes have to go to the Court and as County Courts are not binding precedent, it has to go to a higher court before useful precedents are set… The regular villians here will rub their hands with glee at all the legal fees….. While it might not be about RTM or forfeiture, people will still dispute, be unable, simply not pay or avoid service charges, sublet to less than neighbourly people, break the rules, create nuisance and problems, and do silly alterations.
To Paul Joseph In reply I would say that your view is based on having been “bitten” 😀 and with tunnel vision, see commonhold as the panacea, which it isn’t. My comments are not about a vested interest or leeching ( FH or MA) but to make people aware that CH as a tenure is a rotten toffee apple. Moreover its imagined benefits as I have shown above do not mean the automatic expulsion of peverel etc. As admitted it would need complete overhaul, so I ask “Why bother?”
A commonhold unit agreement will read like a lease for most of its clauses, but for dispute issues like service charges and admin costs, with only the Court to resolve disputes-no FTT or any of the rights, such as they are. As anyone who has lived in those countries and you will soon see that the residents committee or condo board (just like some here) can be just as ruthless and dictatorial, avaricious on fees, and wrong headed as the likes of Peverel. It makes far more sense to therefore overhaul existing rights.
The two issues that remain are control and ownership.
Control can be achieved by requiring the transfer of the freehold or at worst a head lease to an RMC on completion, so why need commonhold if the owners have full control?
Ownership can be resolved with forfeiture not being available for service charges or ground rent etc and retain it for serious breaches if a person does not act on an injunction for say inappropriate alterations of load bearing walls, As a lease is a wasting asset, Perpetuity -1 in effect never ending, meaning no lease extensions etc and a compulsory peppercorn rent, and it can only be forfeited if you do something monumentally stupid that threatens the building.
In conclusion part of the “tunnel vision” that affects the commonhold movement is that it comes in most cases from the new build green/brown field sites and cannot therefore be offered or apply in many existing areas or sites, especially in areas with long established feudal property structures. A minority of sites are therefore pressing for a change in the law which leads them not only into a seriously flawed tenure, but one which is not available for many, even if its < 100%. This means that for home buyers ( ignoring the BTL/asset holders) it presents a bewildering two tier system to choose from and both of which, CH and FH/LH, need overhauling. If you can address control and forfeiture as above then you need only concentrate on reforming one system to make it work for owners.
All of the above entries do not address the problem of the Leasehold and Freehold Owning Developments, where the Leaseholders have the Right to apply for RTM, but, we as mere Freehold Home Owners on a mixed Development apparently do not have that Right. Also, I am advised that there has to be in excess of 50% of Leaseholders to apply for RTM, whereas, is other opinions, there has to be a 100% vote in favour of any change, amendment etc., so just where do I as a Freehold Home Owner on a mixed development stand?
Contact with two MP’s in our Region have met with sloping shoulders, although one did admit that he knew all about Peverel, but, was powerless to act because he could not approach the Housing Minister of that time! Any wonder that I posted a message to say that he was as much use as an ash tray on a motorbike, and that he, having had his attention drawn to this, demanded an apology from me, which was not forthcoming! And as still not been posted by me either in this medium or by letter or personal contact with him.
You are right. In my/our submission to the OFT that was a desired outcome to extend the same rights and protections over to SC to charges from freehold houses and to allow RTM to include houses and, in some cases, commercial units as well. This would extend rights and stop the ridicluous appurtenant nonsense where an investor owns or sells to the entirely unregulated amenity area owners like Meadvale, tiny parts of a development.
Ernest
We know we have donkeys that lead lions, so who is this Neddy that purports to be for the people?
I have met with many Politicians in my working life and only a few were of any great value or help. We are expecting great things from Sir Peter Bottomley who has shown great wisdom in attempting to show real interest in Leasehold.
When attempting to speak to him on his mobile partially to thank and ask a further question I was informed to phone some one else?
Remember that Politician’s work for their party, they only take up problems when they can benefit themselves ?
They will not allow the truth to get in the way of the party?
Did anybody see the interview with Eric Pickles who felt it necessary to say that Lord Smith was wrong and then see him today on BBC Parliament when he had been instructed to say that they were great friends and brothers from different mothers????
I think that Eric Pickles has placed himself in a real salad and will regret these childish comments to pass the buck away from himself as a stand in for the MP, who requires his eyes looking at and should not operate whilst driving the Conservative Party down a slippery slope.
Today, as I review the comments herein, I am still no further in getting answers or solutions. Well, I am determined that in the time I have left to me on this Planet, that I will withdraw nothing I have said about MP’s and will hold back any further Service Charge Payments in the future, so bring on the Barristers for Peverel, I will give you a shot in the arm to put into your memoirs! Peverel stinks, and all those who are associated with it! Politicos, I hope that your researchers bring this to your attention!