Today MailOnline reports the issue of leasehold houses in Newcastle where the St Mary Magdalene and Holy Jesus Trust is the freeholder.
It won’t extend the leases to the properties because it has received advice from “a senior QC” – whatever that means – that it does not need to.
Charities are exempt from the enfranchisement rights enshrined in the 1967 Act.
Chi Onwurah, Labour MP for Newcasle upon Tyne Central, told the Commons earlier this week that issue exposes:
“… a situation that combines all the worst parts of Dickensian legal tragedies, Kafkaesque bureaucracy and Catch-22 conundrums with charitable oppression thrown in”.
Exclusive Georgian houses left worthless in legal row
Residents on St Thomas’ Estate in Newcastle are unable to sell their homes Their leaseholds have dropped below the limit a bank will grant a mortgage Landowners claim law forbids them from allowing the leaseholds to be extended Houses on the exclusive estate in the city centre can sell for at least £520,000 Homeowners on an historic Georgian terrace have been left ‘trapped’ after a bizarre legal row left their homes worthless.
And the Newcastle Chronicle:
Homes on Newcastle’s most beautiful street rendered practically worthless
Residents of one of Newcastle ‘s most beautiful streets have claimed they have been left “prisoners in their own homes” as their properties become practically worthless. Due to a legal complication, residents of the St Thomas’ Estate are unable to extend the leaseholds on their properties or buy the freeholds, rendering them unsellable.
Although Ms Onwurah, Labour MP for Newcasle upon Tyne Central, addressed the Mary Magdalene and Holy Jesus Trust, the points she made could just as easily apply to any leasehold house owner of the National Trust or the assorted charities associated with residential freehold investments such as Wellcome Trust, or the Freshwater or Moskovitz families, who have incorporated freeholds in charitable entities.
Why are National Trust leaseholders in uproar over ‘modern ground rents’?
Related posts:
‘Uncharitable’ Mary Magdalene and Holy Jesus Trust and the issue of lease extensions
MP attacks ‘charity’ residential freehold owners gaming the leasehold system and cites the Mary Magdalene and Holy Jesus Trust
Families challenge Long Harbour for freeholds to Bellway leasehold houses, The Times reports
BBC R4 You and Yours reports MPs saying leasehold houses are a ‘national con’
Daily Telegraph reports the new-build leasehold houses ban
Croydon leaseholders at Citiscape face £750,000 bill to remove Grenfell Tower cladding
As a cardinal rule I try never to even appear to criticise religion, least of all because my sainted mother would haunt me.
The facts as presented:-
‘St Mary Magdalene and Holy Jesus Trust’ was founded in the 12th century. According to the press report, a senior QC has advised that “the current wording of the law” forbids it from extending the leaseholds for which it holds the freehold?
Leaseholders are subsequently now trapped and cannot sell (presumably unless they sell to cash buyers at a significant loss?).
If these are accurate facts (serious ‘if’), my personal thoughts would follow thus…
What law is referred to? It would be good to know the precise stumbling block clause(s).
UK charities do not have to be religious. They must all however adhere -as I understand it- to the Charities Act (2011 and or 2016?).
How do charities ‘protect the public’, especially where a conflict may occur between their need to use their funding for their prescribed ‘good deeds’ but their fund raising methodology may have a negative impact on the needs of others, as seemingly here?
Then there is the religious area of charitable works.
Secular charities operate in the world of donations, fund raising and ‘hand outs’ to those in need based on their mission. Religion and religious charity doesn’t come into it.
Aren’t religious charities on a different level? “Caritas” goes further than administering hand outs or services to ‘beneficiaries’, or fighting for certain rights (like LKP).
Caritas is a theological virtue. It encompasses goals such as promoting justice, love of neighbour etc, and is fairly limitless in these respects, no?
The fruits of caritas are joy, peace, and ***mercy***, it is said.
So we have justice and mercy added in the mix? Nobody’s expecting love in a literal sense. Maybe fairness for all sides? Not just sympathy?
By its name this ancient charity gives at least a face value appearance of being a religious one? Or perhaps it was once and no longer is? I would be interested to know the answer.
The charity states its Aims and Activities as:-
Provision of housing – almshouses – for older persons who are in need, hardship or distress within Newcastle upon Tyne. Payments for the relief in need of the Brethren and Sisters of the Hospitals of Thomas Davison, Ann Davison and Sir Walter Blackett. Making grants to, & provide or pay for items, services & facilities for individuals & organisations who are in need, hardship or distress.”
I’m guessing the leaseholders in this matter are not ‘beneficiaries’ but the source (yield) of important income?
On the charity commission website there is this:-
“Land And Property
This charity owns and/or leases land or property. Some or all of this land or property must be used for the charity’s purposes.”
I presume therefore that the leaseholds in question are trapped in the ‘must be used’ category? What could this ‘must be used’ be? Is there no leeway at all?
What ironic double bind regulation stops a religious charity putting justice and mercy (and fairness) into the decision pot to permit it to exercise caritas by the expedient of extending a reduced term lease (no need to peppercorn the income under current exemptions?) for a tidy market premium with all costs paid by the leaseholder too, whereby the charity can still protect its income stream from ongoing ground rents and consent fees etc, AND also retain its freehold asset?
Accepting the QC’s advice is private, is it not possible to know the precise legal obstacle? Is it an unbending legal fact that the charity must hold to the freehold reversion based on the original term of lease?
Is this not a classic baby lost with the bathwater situation? Look at the bad press, if nothing else.
The day religious charities need solicitors to help them define ‘caritas’ in action is a sad day in my layman opinion.
An appalling piece of reporting by the Daily Mail
“forbids it from extending the leaseholds for which it holds the freehold?”
The Act does not forbid it, rather it precludes the lessees having a right to extend which is a different thing altogether.
The Crown are also exempt but have said they will follow the spirit of the Act
Oh please! Why don’t they just commit harakiri and be done with it? the law that needs to be changed so it no longer allows for exploitation. There are distinct similarities between ‘charities’ involved in property and organised crime.
So stepheb, what do these lessees have to do to get out of the situation they are in
If they purchased after the 1993 Act took effect they may have a claim against their solicitor for not advising on this point – claims need to be bought within 6 years
Stephen, surely it needs a rather large patch over one eye to revert always to the argument that everything leasehold would be okay if only solicitors gave better advise?
Let’s say Patsy bought a leasehold flat 15 years ago. The freeholder at that time was not a charity or otherwise exempt from having to grant lease extensions or enfranchisement per the apparently perfect 1993 Act.
Let’s say Patsy’s freeholder (a) had the freehold wrapped in a company’s assets; or (b) offered the freehold as Right of First Refusal, but either way Patsy could not buy the freehold either because in alternative (a) it was sold over her head; or under (b) she couldn’t get the numbers to participate and couldn’t afford to buy the lot herself.
Let’s say Patsy’s original freeholder sold to a charity in the market to hoover up tidy little ground rent yields.
Now Patsy has a charity as a freeholder and needs a lease extension.
By your argument it would seem Patsy’s solicitor all those years ago should have warned her there was always a possibility a freehold could sell to a charity and become an exempt freeholder? But now Patsy can’t sue her failure of an oracle as she bought more than six years ago.
Those that have eyes see. The rest fumble around for excuses? The whole edifice of residential leasehold is a mangy dog’s vomit, what say you, sir?
Even if I have overlooked something, there will be other suchlike leasehold gotchas that would make always blaming the solicitor hollow. The only client-friendly advice any solicitor could give regarding leasehold is DO NOT BUY.
Paddy , why on earth does a clearly educated and informed man such as yourself hive “ Stephen “ House room?
He is clearly posting as an Agent Provocateur. He is probably doing so from the spare room in his mums house. Why give him credibility by responding to his comment so?
I say that everyone should Ignore Stephens comments, You are only encouraging the little lad!
I need spell check.
Must admit I assumed the legal obstacle was the Charities Act, what with reported references to fear of what the Charities Commission would do?
Can’t be the leasehold law, can it, because any freeholder can agree to extend a lease or sell the freehold, right?
Thing is, religious organisations sell property. I have seen ancient convents on the market. Old churches are de-consecrated and sold off, aren’t they? Are religious communities charities?
Besides, if a charity gets a market price for their asset, how is this a loss? That’s the point about enfranchisement or lease extensions. Either which way, a freeholder loses not a penny, no?
Also, I’m curious at use of the phrase: “Some or all of this land or property must be used for the charity’s purposes.”
Logic suggests that a state of “some or all” cannot co-exist at the same time? So is some of the land and/or property bound to be used for X but not all of it? How is this differentiated? Has anybody looked?
I still say this looks like a classic case of throwing baby out with the bath water.
The government seems to think it can act as ‘honest broker’?
Just another day in the life of English leasehold?
Roll on 7 November, that’s if we still have a sitting Parliament by Tuesday.
The law allows Religious charities of all denominations to explot the system. MENUCHAR LIMITED Company number 01017215 which controlled our lovely house, was registered as a charity “helping” and “promoting ” Jewish cultural ad religious activities. I see that it no longer has charitable status , but still controls hundreds, if not thousands, of leasehold related companies and activities,
To say that we must folllow the spirit of the law is nonsense, the law needs to be made clear and protect the leaseholder from exploitation.
Menuchar Limited charity number 262782 does exist and dispenses funds, primarily in Barnet.
I have no idea what ‘advancing religion in accordance with orthodox Jewish faith’ can be said to encompass, but the charity racket Is beyond words.
Perhaps those who have been fleeced for ‘charitable purposes’ should file for tax relief for all our ‘donations’.
Charities, we live in an age were exploitation and misrepresentation are the norm, charities are competing with those involved in the leasehold racket for primacy. Charities are vile organisations, they are only matched by the leasehold racketeers.
Hear hear. And hopefully the ‘ Leasehold Racketeers’ days are numbered, otherwise I am calling for a revolution.!!!Daivid I hope that you are continuing to share the petition. I
I am reduced to rugby tackling strangers and urging them to sign. FIGURITIVELY speaking of course………..
Kim, your passion for the cause does you great credit. I continue to promote Katie’s petition at every opportunity – online in newspaper forums, and with neighbours, all of whom are leaseholders. Some respond positively, even enthusiastically, others less so.
Remember when you rugby tackle these folk that once you have physically engaged with them, you have a duty of care (RFU rule 42a, para 4) and they are little harmed when you (gently) deposit them on the floor. For sake of clarity, “little harmed” means they can be bloodied and bruised, but requiring hospital attention oversteps the mark.
David Ha ha ha. Point taken…..
I have been taking lessons from. ‘ Harry Williams’ ’ who is the son of my friend. Hope he’s picked to play for England at Twickenham.
Keep up the good work comrade.
Charities should not get tax breaks for that sort of activity. Promoting orthodox Jewish faith through property deals, when there is a housing problem.
I totally agree with you Fleecehold reform. All this “ Charidee” stuff seems very shonky to me. Religion has no place in Bricks and Mortar. It’s got to stop.
Assuming the leasee purchased the property after the 1967 Actwas passed they would have known that enfranchisement was not possible as the freehold was held by a charity
This severe impediment would be expected to be reflected in the price they paid.
It would seem unreasonable to criticise the Act when on the one hand it gives them an advantage on purchase but when that advantage is taken back on sale there are cries of foul
Oh give it a rest Stephen. Really, nobody is taking you seriously. Drink your warm milk and go to bed. It’s school night.