The Leasehold Advisory Service, the government funded Leasehold Advisory Service, has been under review by the government for much of the last ten years.
This seems to suggest that something is wrong, yet the government’s long-standing support for the Leasehold Advisory Service continues.
LKP has, after many requests, obtained the two most recent reviews of the Leasehold Advisory Service under a freedom of information (FOI) application. Inexplicably, the two reports continue to praise the work of Leasehold Advisory Service. This contrasts starkly with both the submissions by others to the Communities Select Committee and its cross-examination of Leasehold Advisory Service chief executive, Anthony Essien.
Over the last decade there have been four reviews of Leasehold Advisory Service:
- A review was scheduled for 2009-2010, but it is not known whether this ever took place.
- A “red tape review” of LEASE did take place in 2011, but the government now tells us “there is no red tape report”.
- In the summer of 2014, the government started a Triennial Review of LEASE. Requests for the report were made in 2016 and 2017 and the report has now finally been provided to ourselves and the APPG in December 2018. The report itself records that it was actually completed in February 2016. The FOI response notes that this report (2016 report) is now “out of date”.
- In 2018 the government undertook a further “Internal review of the advice and support for leaseholders” generally. That report was completed at some point earlier this year. Following our FOI request this report has now also been provided to ourselves and the APPG.
The 2016 report can be read here Triennial Review
The 2018 report can be read here Review report
Some key points in the reports
The 2016 report looks only at the role of Leasehold Advisory Service. The 2018 report states that it provides a “holistic” review of wider leaseholder advice.
Both reports include sections of the data from the Leasehold Advisory Service’s annual performance reports but do not question or develop a critical understanding of that data in any detail.
Both reports conclude that the service provided by Leasehold Advisory Service is good with only small caveats about areas for improvement.
Paragraph 21 states, that there are no other organisations “which currently provides a similar, free service” or which have the “capability to deal with complex leasehold issues”. We would clearly not agree as LKP do both. In fact, we deal in more detail with more complex cases than LEASE. Mr Essien told the Communities Select Committee that his organisation does not do casework.
Paragraph 22 implies “partners overwhelmingly supported” LEASE and that “customers trust the advice that LEASE gives and believe it to be impartial and independent”. That does not match the information provided to the review by LKP and the APPG since both “partners” and “customers” raised questions about the role of LEASE and the fact that on occasions they provide poor advice.
Paragraph 27 uncritically accepts the claim that LEASE helps approximately 750,000 customers a year. Approximately 93% of that help is via their website. What the reports do not consider is that the count of unique visitors to a website, used to calculate this figure of 750,000, does not equate to the real number of people visiting the website.
Further, the number of visitors to the website does not equate to customers actually being helped. Using the same measure LKP could claim to help more than 300,000 customers a year.
If there were to be 750,000 people asking for help every year on leasehold issues it would suggest an even bigger problem with leasehold than is likely to be the case. A large proportion of the people “helped” by LEASE will actually be providers in the sector wanting to know what information is available to leaseholders. Providers are also more likely to want to use particular parts of the LEASE website such as the section which allows them to review Tribunal case decisions.
“Unique visitors” is such an unreliable measure because, when an individual uses different computers, tablets, and phones, or different web browsers, this results in multiple counts for the same person. 700,000 unique “visitors” could easily be 100,000 individuals, and not all of them will be leaseholders. Yet even Ministers repeat this highly inaccurate claim by LEASE without question.
Paragraph 33 looks at customer satisfaction in relation to one set of issues, noting the results for all categories are below 50%. There could be many legitimate reasons behind these figures. However, the report chooses to speculate, without appearing to offer any evidence, that this dissatisfaction may be because “Customers may also not get the answer they wanted”. This view, which some may see as pejorative, seems unhelpful and suggests negative preconceptions about leaseholder attitudes on the part of the reviewer.
Paragraph 1.2 states that the review’s focus is on the help offered to leaseholders across the whole sector. However, it then states: “Although the review took a holistic approach to the provision of advice to leaseholders, inevitably, the role and performance of the Leasehold Advisory Service (LEASE) was a primary focus”.
The report does not explain why it is “inevitably” the case that it needs to focus on LEASE. There is perhaps an implicit, but incorrect, assumption that LEASE effectively has a near monopoly as a provider of help to leaseholders.
The review then fails to mention the work of LKP, the FPRA and many other groups.
Paragraph 2.11 contains a statement which is factually inaccurate.
“LEASE themselves were clear that they were “unashamedly” on the side of leaseholders.”
Unfortunately, they were not. In 2016 the same management had supported a move to commercialise their income from landlords and agents even further.
These two positions are entirely inconsistent. Both the 2016 and 2018 reports also failed to make clear that LEASE had been looking to expand their commercial activities, long before government asked them to do so.
It was Housing Minister Gavin Barwell, not LEASE, who decided that this commercialisation must stop in February 2017.
Despite this apparent change of stance, at the end of 2018 LEASE has still not updated their articles of association to make clear they are only there to support leaseholders. The articles still say they will provide:
“advice and information to members of the public and in particular to landlords and tenants”
The government also confirms that LEASE’s business plan has not been updated since the February 2016. This is the plan where they look to expand their commercial interests still further.
The 2018 report does, however, make clear that LEASE have now agreed to provide help only to leaseholders. It is not clear why the articles and business plan have not been updated.
Paragraph 2.13 states there is no “market provision” of a LEASE-type service. This is clearly factually incorrect given that LKP and a number of other providers exist in the market, despite the government’s monopoly support and funding for LEASE.
The market enquiry in the 2016 review (paragraph 61 iii) refers to “exploratory market testing”. The authors of the 2018 report will not necessarily know that the 2016 review does not give a clear picture on this point. The “test” was carried out at the end of October 2015. It’s stated objective was to see whether other groups were interested in providing services to leaseholders.
The test comprised a short and generalised document, published on the Cabinet Office contracts site. The document was not advertised. It also required a response within just 14 days. Few will have seen the document, and even if they had it was by no means clear what kind of response was expected. It can reasonably be assumed that if more time had been allowed a large number of commercial providers would have been interested in bidding to supply the training and commercial services offered by Leasehold Advisory Service at the time. Groups like LKP and the FPRA would have been interested in bidding for funds to support their work offering leaseholder advice services.
Point 3 of paragraph 2.2 states there is: “The requirement for a consumer champion or national voice for leaseholders. When pressed it was generally agreed that this point was not about direct lobbying or criticising government which may be inappropriate.”
We would ask why the report asserts that criticism of government’s policies would somehow be “inappropriate” for a consumer champion?
The report then provides this definition for the role of a consumer champion: “clarifying the purpose and empowering any organisation that provides advice to make better use of internal data, information and intelligence to identify abuses or anomalies and raise them with government to inform policy making”. This unusual and incorrect definition of a consumer champion gives the appearance of having been reverse engineered to simply reflect the limits of what Leasehold Advisory Service has done.
LKP has spent 8 years identifying abuses, providing data to the Housing Department on a wide range of issues, providing advice to leaseholders, accrediting ethical managing agents, convening more than 30 cross-sector meetings in parliament, acting as APPG secretariat, reporting on the sector and acting as the independent consumer champion. Yet LKP, for some reason, are not even mentioned in this “holistic” report.
What the report seems to imply is that somehow Leasehold Advisory Service could, in fact, be the consumer champion.
The government and officials and Leasehold Advisory Service all seem to forget that they spent many years claiming the leasehold system was “balanced” and “mostly working well”. As recently as last year Leasehold Advisory Service made clear it was not their job to tell the government about problems in the sector. It feels uncomfortable that the Housing Department has concluded that it would be a good idea for Leasehold Advisory Service to suddenly transform and be seen the consumer champion.
Paragraph 2.5 considers “gaps in provision”. Again the comments focus on Leasehold Advisory Service rather than the sector. The report suggests that LEASE could somehow help to fill these gaps in provision, despite the fact that they have not done so over the last 20 years. The author of the 2018 report may not be aware that a number of the suggestions in their report have already been tried by LEASE before and have failed.
Section 3Many would disagree that Leasehold Advisory Service is seen as the first port of call for all leasehold advice, given that much of the advice needed may not have a direct link to the law. The idea that LEASE might be regarded as a consumer champion (3.2) suggests that the Department has not fully understood what LKP has been doing for the last 8 years, while LEASE was helping landlords and agents.
Conclusions from the reports
It is far from clear why it took 18 months to produce the 21 page 2016 report, or why it then took another 32 months to publish that report.
Both reports exclude the views of a number of the key stakeholders, including LKP.
The 2018 report states that it has taken a “holistic” approach but the report then focuses almost entirely on Leasehold Advisory Service. The report does not reflect the work of groups other than Leasehold Advisory Service. It does not review the nonlegal aspects of leaseholder support which sit outside the scope of the role of Leasehold Advisory Service.
The 2018 report does not explain why there was a fundamental change of approach in February 2017. This change arose, as far as we understand, not from the 2016 report, but due to the decision by Minister Barwell to entirely dismiss the approach adopted in the 2016 report.
Because both the 2016 and 2018 reports only focus on Leasehold Advisory Service neither report considers whether there is potential damage to the market in continuing to take a purely Leasehold Advisory Service centric approach. The reports do not consider why groups like CARL have now fallen away or why AgeUK and a number of other groups have had to close down their leaseholder support offering, not because the problems have gone but perhaps because the government continues to offer a monopoly of support to LEASE, making it almost impossible for other organisations to survive.
Neither report comments on the fact that the government’s monopoly approach is likely to have become a self-fulfilling prophecy.
Leasehold Advisory Service has almost a total monopoly of government funding, support and recommendation for leasehold advice. Hence all government bodies feel they must refer to it and recommend it, and many commercial providers in the sector feel they should do the same. The government has confirmed to LKP that their decision to provide LEASE with an additional £465,000 to help with the cladding emergency was not subject to any form of competition or formal tendering process. The money was simply passed to LEASE without any additional framework agreement or formal memorandum of understanding.
Both the 2016 and 2018 reports fail to take the opportunity to critically examine Leasehold Advisory Service’ performance or to evaluate whether that performance is good or bad across particular issues or via different delivery mechanisms.
In the 2016 report it uses the results from a survey of 1,000 customers. These were customers who were happy for LEASE to keep their details. It is unlikely that this very selective sample is representative of all leaseholders who have experienced problems and contacted LEASE.
At paragraph 39 the 2016 report quotes a positive comment about LEASE from the CMA 2014 project on property management. We would not entirely agree that the CMA comment reflects the evidence provided to them. What the 2016 report does not reflect is that the CMA survey also showed that only 4% of leaseholders went on to contact LEASE (page 121) when they had a leasehold problem.
We are aware that a number of submissions to both the 2016 and 2018 reports included criticisms of LEASE, and these do not seem to be recorded in the reports. This anomaly has now been highlighted by evidence submitted to the Select Committee, which is far more mixed than suggested in the 2016 or 2018 reports.
LKP’s view of Leasehold Advisory Service
LKP’s position in regard to LEASE has been set out in our submissions to both reports and on our website over many years.
LKP accepts that most, although not all, of the written guidance on LEASE’s website, is good or at least adequate, however, over the years we have highlighted many problems with Leasehold Advisory Service and exposed a number of serious failings, including:
- Advertising poor practitioners in the sector
- Helping landlords and managing agents to gain an unfair advantage in the tribunal
- Helping promote systems which allow landlords to gain an unfair advantage over leaseholders
- Providing poor legal advice on certain issues
- Providing advice that can sometimes lead leaseholders into wrongly taking action in the Tribunal
- Not exposing clear deficiencies in the legislation
- Poor board selection processes by officials as indicated by issues with two chairman and other board members over the last ten years
- Opposing legislative change which would have been beneficial to leaseholders to improve balance in the system
- Continuing to work in such a way that allows them to be thoroughly endorsed by some of our worst landlords
Despite these concerns and the input of others, both the two most recent government reports state that “LEASE advice was well regarded”.
Leasehold Advisory Service and funding for other leaseholder support
Support for the Leasehold Advisory Service from government has continued throughout the last 20 years. In that time LEASE will have been paid the equivalent of more than £20 million.
The most common complaint we hear about Leasehold Advisory Service is that they can only provide very limited advice, i.e. one 15 minute phone call. This means they have limited scope for looking at the detail.
Throughout this 20 years, the Housing Department has actively chosen not to support any other group working to make a difference in the leasehold sector.
The lack of support from the government for other groups remains unexplained. The funding system for LEASE falls under legislation which allows the government to support “any” group offering help with leasehold issues, rather than just LEASE. As far as we are aware in the last 20 years no monies have been provided to “any” other group except LEASE.
The Housing Department has no procedure to allow any organisation other than LEASE to apply for funds. As was stated at a recent Select Committee hearing by Shula Rich of the FPRA, in the past officials have even wrongly stated that no monies are available under legislation to anyone else but LEASE.
The claim in both reports that LEASE offers good advice to leaseholders seems to sit in direct contradiction to the oral evidence submitted by two leaseholder groups to the MHCLG Select Committee, 5th November 2018. The NLC, the FPRA, LKP and the APPG expressed concerns about the “help” provided by LEASE. On 10th December 2018 the Select Committee interviewed LEASE chief executive Anthony Essien, who faced a large number of criticisms of his organisation.
Yet despite our concerns and those of others, the government continues to assert that LEASE should carry on as they are. At the moment the government is selecting a new Chair for LEASE, who is tasked with yet another review of their work. It is expected to take 12 to 18 months.
If the Housing Department continues to provide LEASE with a monopoly of funding, a monopoly of endorsement and a monopoly of support, is it any surprise there are so few other providers able to offer help in the sector?
It has been very telling, throughout all these reviews, that nobody has asked LKP to explain what help we provide for leaseholders. Had they done so they would have found that we also have hundreds of thousands of people who visit our websites every year, and thousands of people who receive individual help and support.
A comment in the 2018 report which is particularly disheartening to LKP is:
“On building and fire safety it is acknowledged that LEASE has a difficult role.”
Yes, it is difficult, but with an extra £465,000 provided to Leasehold Advisory Service, it’s a lot less difficult than the position faced by LKP. We have had to help on cladding issues and have run cladding forums in parliament and meetings with building safety officials and agents and cladding experts without a single penny of help or support from the government.
It concerns us that the officials should make such comments when they are aware that we have ended up helping cladding sites who have been given poor advice by LEASE.
Well done Admin for finding this information out.
LEASE, the QUANGO set up and funded by Government to the tune of £2million pounds a year, has been a disgrace. I watched the latest Leasehold Reform and noted the presence of Seb, Martin and Sir Peter, some of the smiles were interesting.
To now say, LEASE has been under review for 10 years and they are still going strong, is very surprising as the Office of Fair Trading (OFT) another QUANGO was replaced soon after the scandals concerning Price Fixing 2015/16. The cost to the Tax Payer for the Investigation was half a million pounds. Fines of circa £57,000 to 4 sub-contractors were never paid, except for £1,200 paid by the smallest sub-contractor, letting the main contractor Peverel Retirement of without a slapped wrist. It does show something is very wrong yet The Government’s long-standing support for LEASE continues.
To use the FOI Act by LKP was a stroke of genius. The fact the two latest reports inexplicably continue to praise the work of LEASE. This shows that how those who received the reports were not aware of the continued failure or ignored the failures.
The submissions by others to the Select Committee and their cross-examination of LEASE’s chief executive, Anthony Essien, showed he was aware what had happened and allowed Commercial Seminars that helped Freeholders and Landlords to maximise profits by using the Leaseholders as Cash Cows.
* 2009/10 – Red Tape Report no evidence it was undertaken
* 2011/12 – Red Tape Review took place but a Red Tape Report has been caught up in Red Tape.
* 2014/15 – A Triennial Review of LEASE, asked for in 2016 and 2017 finally been made available
* 2018 the – APPG report was actually completed in February 2016.
How can the FOI Act be stating a report in 2016 is now “out of date, surely this can not be said by anyone least of all those who provided the FIO?
I will read these reports and then report as long as I don’t find any Red Tape that prevents me.
These are the aims of the LEASE Review: (they are no longer QUANGOS they are – None Departmental Public Bodies) (NDPB)
1. It is Government policy that a (NDPB) should only be set up, or remain in existence, where the model can clearly be evidenced as the most appropriate and cost effective way of delivering the function in question.
Strait away it failed as the information it was providing was not the most appropriate as it catered more towards the Freeholder/Landlord as it was not properly funded and Commercial Activities were introduced to providing extra funding, but there by failing some Leaseholders.
2. In April 2011, Cabinet Office announced remaining NDPBs, following the Public Bodies Act (2011), would require a Substantive Review once in a three year cycle. Triennial Reviews have two principal aims, to provide a robust challenge of the continuing need for individual NDPBs – both their functions and their form; and where it is agreed a body remain as an NDPB, to review:
It failed to delivering effective and efficient, savings, and contributed little to Economic Growth, or to proper control The Governance Arrangements in place. It failed to ensuring this NDPB and The Sponsoring Department complied with recognised principles of Good Corporate Governance along with an Assessment of LEASEs performance.
I believe an introduction to LEASE may be helpful so this is a precis.
1. Introduction and background
Tackling unfair practices in the leasehold market’, The Government is committed to “a wider internal review of the support and advice to leaseholders to make sure it is fit for purpose.
chas claims they FAILED
1.2 It took a Holistic Approach (the theory that living matter or reality is made up of organic or unified wholes that are greater than the simple sum of their parts to the provision of advice to leaseholders where the Role & Performance were a Primary Focus?.
chas claims WOOOOW .
1.3 LEASE was set up in 1994 as a QUANGO limited by guarantee, and became an Executive Non Departmental Public Body (NDPB) in 2005.
LEASE was set up to provides independent, impartial, initial legal advice on the complex area of residential leasehold law, to includes advising Park Home owners. The major funding is grant aid from MHCLG with smaller funding provided by the Welsh Government, which included up to £465,000 extra funding over two years for LEASE to provide an additional service to support Leaseholders on: “wait for it Building Safety and Fire Safety related issues”.
Has anyone been aware of this was Grenfell aware or knew about this as they showed their concern up to 2 years before the fire after the Refurbishment and if not, why not? They were a Government Body?
1.4 There are currently 25 members of staff, 18 of whom are advisers. leaving 7 as admin support. The board made up of six members, although half of the members were not in place and was rudderless not having a CHAIRPERSON. This reflects changes to the membership of the LEASE board as in April, 2018 Roger Southam finally resigned as it was considered his position was a conflict of interest, with his personal business. The Government had been aware of this for some time but was supported by WHOME we do not know yet, then the next month Nicola Mullany resigned from her position as a board member?
1.5 Although the review is entirely separate to the issues surrounding, Roger Southam’s position, stakeholders comments seeking to improve the provision of advice and support to leaseholders, were considered including, implications of perceptions of LEASE within final recommendations.
1.6 Although the review was announced as part of the wider commitment to Leasehold Reform including Park Home Owners, about the future of LEASE and the advice they provide. Remember in their words (Park Home Owners) who are not owners, but as with flats have a long tenancy without ever owning the Park Home. Poor interpretation by LEASE, “WHAT”?
Sadly LEASE still does not speak out against government funded HELP TO BUY ground rent increasing every 10 years at RPI, the new accepted rate in the industry supported by LEASE.
Sadly government funded charity Housing Associations like London & Quadrant & Catalyst charge leaseholders and affordable flats with the above onerous ground rents. saying be grateful because we are changing terms from doubling every 15 years. Take it or leave it and speak to your adviser.
Countryside Properties, Taylor Wimpey, Persimmon etc form regeneration partnerships and hand over ground rent collection to the HAs. HAs are unaccountable and just as greedy for maximising GRs.
LEASE has nothing to say that supports homeowners fighting for zero ground rents on new and existing leases. Funding should be transferred to LKP who are on the side of homeowners if government wants to truly support homeowners.
The LEASE website says :
LEASE is governed by a board, appointed as individuals by the Secretary of State for the Ministry of Housing, Communities & Local Government.
So we need some one like Gavin Barwell appointed to the Chair to modernise LEASE. thinking..
The idea of seeking a balance between Freeholder and leaseholder under an unfair property system is simply crazy once you look at the economics of the situation . This idea of retaining balance came from Grant Shapps who promoted this crazy idea to avoid changing the unfair system. MPs represent the voting leaseholders who have no interest in “balanced housing policies”
If you look at the property developer’s current sales revenue from sale of new 2 bed leasehold flat at say £500K plus annual ground rent at £500 p.a ( annual ground rent ratio = 0.1 % of £500K which LEASE thinks is a fair ratio ) .
The developer receives £ 500,000 from leaseholder ( for a 125 year lease ) plus £500 x 20 from the freeholder ( Buyer of the freehold title which gives legal ownership ) . In terms of equity stake , it means roughly :
the ” leaseholder” pays £500,000 for 98% equity stake in the property .
the ” freeholder pays approx £10,000 for 2% equity stake in the property.
This means if any Government is seeking a “fair balance ” , it should give :
(a) 98% controlling shares in the freehold company to the flat buyers.
(b ) Enfranchisement for every block of flats based on £98 price for freehold title.
(c ) The forfeiture proceedings for ground rent arrears should be withdrawn from legislation
( d) New leasehold flats sold above £83,000 shall be charged 20% VAT ( exemption if NIL ground rent ).
The idea of retaining £10 p.a ground rent shows even MORE unbalanced thinking by the Minister.
Merry Christmas to all .
Remember the Law Commission Consultation closes on 7th Jan 2019. We as Leaseholders have already paid upfront 98%+ in the equity investment and We want the correct cost to pay for freehold title set at 2% or less ( whatever price was paid in first sale of our freehold title )