Today sees the launch of an 8 week Law Commission’s call for evidence as part of the reform of Commonhold legislation.
In much the same way the new Housing Minister has made clear the government is intending to introduce legislation to ensure all new ground rents are set to no more than a peppercorn the Law Commision sets out that that leasehold is now on “borrowed time”.
The Commision sets out that commonhold has a number of advantages over leasehold
- Ownership doesn’t run out – leases expire and as they do extending them can be costly.
- Standard rules and regulations apply – which should make conveyancing simpler and cheaper
- Having a stake in the wider building – instead of being managed by a landlord, owners run shared areas together.
The Law Commision is asking for views on
- What the difficulties in creating or converting to commonhold are
- What issues make commonhold unattractive to homeowners
- What issues make commonhold unattractive in the wider property sector
- You can read and respond to the 12 questions set out in the call for evidence here.
Related posts:
48 hours to go: LKP advice on responding to the Law Commission consultation on commonhold
Enfranchisement, commonhold and managing agent regulation are first up for the Law Commission
APPG members list – current membership 153
‘The time is right for commonhold,’ announces Law Commission. (Pity the government doesn’t agree …)
What does LKP think of ARMA reforms, we were asked. As the annual conference begins in London today, here we go …
Martin Paine sells on Blythe Court, where ground rents reach £8,000 a year
Can a defender of leasehold like Izaak or Sue explain why England keeps a feudal legal relic of the empire yet Ireland, Scotland, Australia, India etc have all reformed property law for the modern age.
Leasehold is symbolic of repression and there is no better example than Ireland where landlords from Cromwell onwards used the law to oppress and drive tenants into destitution. Absentee landlords with rent going overseas to England is akin to present day rents paid to overseas tax havens. I just don’t get why politicians think
Millions of leaseholders know the system works for a minority of voters so why are politicians so reluctant to represent the interests of the many voters over the few and change the law.
Joe, Why were vast tracts of land in this country once off limits to tens of millions of ordinary folk? The state and all of its agents – government, police, courts – protected land owners and imprisoned working people in the filthy towns and cities, until the people mobilised – Trespass of Kinder Scout – and forced the hand of government.
Government doesn’t act, and never has acted, for the common good. All the agents of the state don’t act, and have never acted, for the common good. It is only by mobilisation (of the masses) that social change occurs. Government, and the state (and its agents), is corrupt. .
The end of leasehold system in Europe started with the French revolution in 1789 and King Louis, his relatives and supporters were put to the guillotine and their estates were seized and sold off. Because for some time, most of europe was ruled by Napoleon, the commonhold system has been adopted in Europe . Only England and Wales are left after Scotland terminated the leasehold system in 2003..
England and Wales has never been invaded since 1066 and the idea of using commonhold has not been allowed to spread . Any change has to come from the Housing Minister and Cabinet. If the civil servants under Housing Minister are taken out to lunch often, they are easily persuaded to think the leasehold system is better. Also political contribution to the party funds before elections help to keep the existing system .
“Our national parks are managed for the benefit of a tiny, privileged group (grouse shooters)”. This from an article in the Guardian by George Monbiot. Government and agencies like the National Trust are involved in this management. Right across the board an elite few are catered for to the detriment of our nation and its people.
One of the best comments thread I’ve read. I find this discussion informative, thoughtful and – not always guaranteed in the interworld – respectful of opinions.
Complex issues deserve full discussion of alternative opinions and experiences. Ironically, “Verbosity” is a commonly employed ‘straw man’ attack by those of opposing views who do not word count their own opinions or experiences.
Excellent thread and unlikely to be found other than on LKP. Hopefully some civil servants pop by to learn.
Point taken David McArthur. My first time at Tribunal but certainly not the MA’s.
I might even wear a dress- a pink one with a white “ Peter Pan” style collar.
I’ll leave the “ cogent argument” to my lawyer which should suffice as he has been extensively briefed by me of the whole sorry mess!
I do hope some of the posters will turn up and that a representative of LKP might make an appearance. It should be an interesting day.
I am being sued for Major Works costs including “ professional fees” for Works that that have yet to be formally specified, although the MA / surveyor stated in 2014 said that by “ bringing works forward” they are saving us “ £37,000’????
Cannot wait to hear the explanation. Oh, and the surveyor who said the figures were at leat 50% too high is no longer in the picture. Funny that!
Kim, ,my post was tongue in cheek. I wouldn’t dream of giving you advice, unlike someone other – I would run a mile, maybe a million miles, to avoid contact with our legal system.. You have the balls to do so.
Daaaaarlink. I do not believe I have a choice. This shonky ( In my view) MA has taken this action against me. It is also the same MA that has inititiated the “ Defamation \ Harassment” case against me. ( I think they may be heading a “ Max Mosley” moment on that score.ha ha ha.
I believe that I have to fight his case and put these property spivs back In their box where they belong. What a shower.
The Defamation case could well result in prison sentence. Who remembers “ Aitken’s sword of honour and shield of truth’ or wotever! I believe this particular MA is heading for the same fall .
HUBRIS baby!
.
In addition to my above comment and for clarification.
1. My use of the word “Spiv” relates to a person/ persons that makes a living from “ Speculation” . EG Acquiring Freeholds etc.
When you buy a property under freehold title, you can pay £500K and get legal ownership of the property ( and nothing to pay for 125 years .to a landlord.).
This property works for the buyer and may the owner may end up worth £5 Mil .
When you buy a property under leasehold title for 125 years , you can pay £500K and you get a long term rental; agreement for which you agree to pay £600 annual ground rent , doubling up every 10 years and pay service charge for maintaining the property legally belonging to the freeholder..
This property title works for the freeholder and the leaseholder may lose all value at the end of lease..
We were in the Leasehold Trap. Didn’t know it until we tried to staircase. Went through the expensive Obstacle Course. Then tried selling our 58%. Another expensive Obstacle Course. Too many strings against us and favouring the Developer.. Now on the Freehold. More expense. We won’t know how strongly the tentacles restraining us will be until we try to sell again. Never had any transparency. All rules come out of the air and against us. This is Feudal, Banditry and Shame on all the Governments that have ‘HELPED’ and encouraged this outrage. Do not believe you are helped onto the property ladder or shared ownership. That is the first lie. Then the lies continue and the only help is never on your side. Will the Law change? Will this Feudal, rotten system be wiped out? Maybe, but don’t hold your breath. It will take Honest Politicians to stamp it out and they are thin on the ground.
I am a bit surprised at the comments about a rogue or problem board and don’t believe that that is the norm. I do know of one development with a board that is allegedly a bit of a clique, but I know of no such complaint about other RTMs I am in touch with (many). What many have in common, reportedly, is a fair amount of leaseholder apathy, which does potentially facilitate poor governance. It doesn’t, however, excuse it.
All boards should be operating according to a written constitution shared with every company member and making decisions on a proper democratic basis. Our own is scrupulous about this, and we solicit and get proxy votes from those unable to attend the AGM. Meetings are quorate. Decisions are minuted. Minutes are shared. Everything is done strictly by the book, a) because it’s the right thing to do, and b) because the directors would face personal liability for costs if they failed to comply with their legal obligations. We operate an electronic forum, run an annual survey, and distribute a bulletin every so often and an annual report once a year. Our commitment to transparency engenders trust (we also have a board observer who is copied on all board correspondence). It is simply impossible for the board to make expensive decisions without a mandate without risking personal liability in the event of a challenge.
All of us are volunteers, of course, and are unremunerated (not 1 penny, ever). It’s a bit of a given that it’s a thankless job, or almost so, but there’s really no excuse for not holding a board to account whether or not there’s competition for board seats. We have no problem at all with challenges on issues, indeed they’re welcome, a) as a sign people are paying attention, and b) as an opportunity for the board to respond by sharing information (sharing everything all the time isn’t practical), which can provide comfort that it is indeed doing what it should.
Where we face conflicting demands it is sufficient to demonstrate that due consideration of them occurred and to be able to justify our decisions. A person who disagrees with something decided by the board is often best answered by those in favour, not necessarily the board.
Despite our best efforts we have been accused of being high-handed couple of times.
1. We were accused of having done nothing about a potentially emotive issue (related to disability access) by someone who simply let fly (on our online forum). The response showed exhaustive efforts had been made and were still in progress at the time.
2. One leaseholder disagreed passionately about the necessity of a (large) expense. The issue was discussed and voted on at the AGM, which reconfirmed a decision (from a previous AGM) to incur the expense. The votes, admittedly, included many proxy votes, but had the board not been working to the satisfaction of company members those would have been withheld and if decisions were made without a quorum they’d be open to legal challenge. I suspect the individual concerned remained unhappy by but on procedural grounds the board’s position was secure.
Nobody should serve as a board member without ensuring that doing so will not be injurious to their pocket and the best way to do that is to have directors and officers insurance and to do things by the book.
If your board isn’t doing it, demand it.
None of this should have any bearing on the merits of commonhold v leasehold. If responsibilities are abdicated in either case then bad things will happen to the building.
Paul Joseph,
I have shared Freehold and the board which consists of 3 x leaseholders have in my view been negligent beyond all reason. My fellow shareholders x3 who are non directors are in my view apathetic beyond reason.
Thousands and thousand of £££££ s have been spent by the directors on legal fees. AGM’s cancelled on 48 hrs notice and not rescheduled.yadda yadda yadda.
All this will be aired on Monday 5th of March at 10 Alfred Place FTT London ( service charge dispute “ Major Works”)
I am urging posters on this site to turn up and tune in. It could be very informative relating to a MA’s Major Works 15 yr schedule being condensed into 4yrs and the reserve fund being “ uplifted “ from 7,000 pa to 35, 650 pa. Yes Really.!!!
If posters can’t att3nd themselves then please ask your friends to att3nd and report back to you. This is a real live issue. Who knows, some of you might be familiar with the Managing in question. I have produced a Dossier for the Tribunal outlying this agencies past under different guises.
Please come.
Hi Paul,
I recommend reading the archive on Long leasehold Questions forum that goes back years. Focus on leaseholder run companies. What a hoot.
As the Court of Appeal in Embassy Court Ltd v Lipman (1984) 271 EG 545 said of leaseholder run companies:
“Having set up a company, that company is composed of a number of individuals, none of whom may have the slightest ability to do accounts, to inspect properties, to manage properties, or anything else…”
The many ways leaseholders are thwarted by the actions of their own ‘board’ is really rather amusing when contrasted to the ‘real’ world of company management.
Common reasons: apathy and failure to learn their rights as company members.
Common consequence: kept in the dark and fed mushrooms. Even to the extent of an agent on one occasion acting as chair over ruling all the leaseholder shareholders present using the ‘Chair’s proxies’.
Why any leaseholder would be eejit enough to give a managing agent the chair of their company meetings I cannot say. Hope over experience perhaps.
I agree with your advice: If the board isn’t doing it, demand it.
Golly! Giving proxies to the managing agent !
We are fortunate in having a board with useful and complementary skills.
Sounds like the “ dream” I have been living for the past 3yrs., although our Agent just cancels the AGM and doesn’t reschedule if thinks “ awkward” questions will be asked. I demand it’s rescheduled , NO Response..
Double charging for Insurance goes unnoticed by the board as do other inaccuracies In the accounts. ( apparently the partners of 2 board members are accountants)
I must say that our building had been self managed with a board of leaseholders since 1986 . The last 19 yrs I was a board member and appointed “ Managing Agent”. I oversaw all matters to do with the running of the building, major works. We had a very good Chairman and a secretary. all leaseholders.
It worked wonderfully well for the most part and the property was properly insured and maintained to a very good standard .
Since the appointment of the eejit Directors that currently sit on the board and the appointment of an MA who misled the leaseholders to get the gig, we have been up a very expensive creek WITH a diamond encrusted Paddle and crashed!!
Hopefully these eejit directors will be found to have been negligent in abdicating their responsibilities and costing the shareholders thousands of pounds. It is truly beyond belief what has gone on which I why I am sharing this issue with you all.
The only positive that has come out of this sorry affair is that at some point a prison sentence will be passed on one of the protagonists for an unrelated incident….
Edit,
“ At some point I hope a prison sentence will be imposed on one of the protagonists for an unrelated incident” ( very serious)
In addition to my previous comment.
It is my belief that the directors on the board of our Freehold company have abdicated their responsibility. So much so that they have stated that a surveyor recommended by the MA is to be solely in charge of choosing the contractor for the major Works that have yet to be specified or carried but have been costed by the MA as 108,000 Including “ professional fees and vat”.
My independent contractors x3 have costed all conceivable works at between 30, 40,000. £££. The directors do not want to listen , never mind that I managed the property for 19 yrs and oversaw 3x cyclical major works carried out to an exemplary standard and at “ reasonable” cost.
If any poster can tell me what they the directors in question ag3nda is then please inform me. I am at an absolute loss as to how these eejit s have allowed this car crash to happen. What the hell is in it for them if anything????
This is the only thing I havent quite worked out and would like to give the Tribunal my thoughts on this paticular conundrum…….
If the cost of work exceeds £250 per flat, the Landlord & Tenant Act requires the MA to serve a S20 Notice with 3 competitive quotations on the leaseholders for consultation .
You can find the free guide for serving S20 Notice and download from http://www.lease-advice.org .
The MA and RICS Surveyor has to provide service complying to the standard under the RICS Residential Management Code..
Its the leaseholders who can reject the proposed work if not competitive during the consultation.
Its not decided by the surveyor. or Directors of the freehold company..
Dear Ollie,
Believe me, I aware of the s20 consultation process and the fact that the MRICS associated MA and surveyor must ultimately comply with the rules of the RICS little blue book They plainly do not!! . This paticular Agency misled prospective “clients” by stating in their advertising they were a member of ARMA,,,.. I did contact ARMA and the misleading material was removed.
Ollie what I truly cannot phantom is why the directors have allowed this to happen. What could possibly be in it for them.
1. Were they promised that the works falling to their ( leaseholder) liability would be paid for by fellow leaseholders? When I once recommended a contractor known to my fellow leaseholders AM called him a “ cowboy” is an email to an insurance broker.I believe this was done so the MA could use an associated company to carry out the works.
2. These directors, 2 have been neighbours for 20+ yrs and one other who bought in 2013 have been so unbelievably trenchent . Uncommunicative, vindictive and unwilling to see clear reason it is as though they have allowed the MA to collectively lobotomise them. It is extraordinary!!
The other leaseholders sublet their flats and cannot be bothered to “ get involved”.
My lawyer will be asking that the directors personally pay the legal fees associated with this unnecessary case and also will be asking that my fees are paid by the directors personally. I believe the law has changed on the amount FTT can award a defendant. I truly hope some posters on this site turn up on Monday 5 th of March. It could be a learning curve!!
If anybody can please explain why you believe the directors have allowed this expensive car crash of management to happen then please post your views. I am flummoxed!!!!!
I suggest you take a copy of the RICS Residential Management Code to Court and point out the failings to comply. .
Also take a copy of the UK Fraud Act 2006 and quote the sections
Fraud by False -Represenation.
Fraud by abuse of position
Fraud by failing to disclose information
Obtaining services dishonestly
To edit.
MA called him a cowboy.
Wrong adjective folks. “ Trenchant ‘ they most certainly were not. “ foolish” “ unwise”;or plain idiotic describes the directors conduct in my view.
I would love you to have support in the audience on Monday, Kim, and someone from lkp attending. Whatever, best of luck, I am more than eager to learn the outcome.
Thanks David.
I shall of course update you all after the whole ghastly unnecessary process. I fully expect the Tribunal to concur with me that the directors / MA are in breach of my which states that “ Reasonable sums May requested from time to time for future maintenance of the building”.
This MA has more form than red rum and a Dossier has been provided for the Tribunal which is supported by facts.
Ollie,
As i understand it leaseholders have the right to select their choice of contractor to carry out any works unless the cheapest quote is obtained by the freeholder/managing agent.
If this is the case then the choice of contractor is beyond challenge.
So when our decorations were due on my development three quotes were obtained by our property manager and the surveyor appointed to manage the works. The residents added their choice of contractor(MBS) who over the years had provided a consistent level of very good service.
We were particularly keen to have a good standard of decorations a the previous decorations were done so poorly. Highlights included the use of an overweight cherry picker that broke up the pathways and in one instance toppled over against a wall! Painting in pouring rain, no preparation lack of, undercoat and trying to paint over holes in woodwork was common. Large parts of the development remained undercoated..when challenged the property manager was replaced shortly after it had been comprehensively proved that she lied over the specifications of the cherry picker..
Subsequently the managing agent told the residents that this particular decorating firm would never be allowed to work on our development again.
So moving forward three quotes were obtained for the decorations. the cheapest being around £90,000 the most expensive coming in at some £40,000 more. Our choice came in at around £17,000 more than the cheapest quote.
When explaining the disparity of the quotes the surveyor informed me “That I don’t understand how quotes work? Three quotes have to be obtained and of course not all companies that quote actually want to do the work”
So we were told that the firm with the cheapest tender was gong to be used and because they were the cheapest the residents could not challenge it?
you should have seen the colours of the rainbow that appeared on the managing agent’s and surveyor’s faces when I pointed out that a search of Companies House revealed that the winning tender traded from the same address that the company that was banned traded from!
a couple of weeks after this “embarrassment” we were told that it was an administrative error and to re-assure us a copy of the tender document was enclosed.
Unfortunately,this tender document only had a name scrawled in biro at the head of the document with no address on it. Two further tender documents had slightly differing names on it.
A third one that was produced did have precise details. It was a firm based around 100 miles away(who when I contacted them knew nothing of any decorating project)
In an attempt to “resolve issues” our managing agent decided the decorating project would be based on the result of a residents vote. This vote by a majority of 1 came out in favour of the original bidder (though no evidence was ever supplied). The head of customer relations pronounced himself satisfied with the tender and the vote.
That said within days of my complaint the decorating project was postponed, the surveyor removed from the project and the property manager left the company’s employ very suddenly !
4 years after the original start of the decorations, they were finally done (to a reasonable standard) and the quote was £40,000 cheaper.
I will not name the company involved on this site, but if anyone does want to know who it was they may be able to find out on the About Peverel website?
Dear Michael,
I fear I may have the same problem when the s20 consultation finally gets under way. . But I shall fight like the devil to ensure that the MA and eejit director’s act accordance with the current legislation.
I notice you say the “ cheapest” estimate was £90,000 a day your estimate was approx £107,000. I am sure your Estate is larger than our building?
The MA / Surveyor and eejit Directors came up with a £108,000 for cyclical works on a well maintained Victorian house converted into 7 flats . . NO works specification or leaseholders liabilities. An arbitrary figure plucked out of the air that even the MA’s surveyor thought was extortionate.
I am so eager to hear the MA justify their position. Michael if you have an hour or so to spare please attend the hearing. If you cannot I fully understand. I just think you might find it quite interesting. Perhaps a trip down memory lane…
Incidentally, as I have now instructed specialist in relation to the Defamation case and they are not available for the other sides dates I have been advised that the trial will now not be until October / November
Master Epstein
Wot a palaver! Your fellow leaseholders are fortunate you are in their corner.
I am not sure how big your estate is but you quote the highest estimate was £90,000.
The subject property in which I own a flat icomprises of 7 x flats and has been a consistently well maintained property. £108,000 The MA has budgeted for and the eejit directors have allowed this. The MA also stated that we were saving £37,000 by “ bringing Works forward”? I am looking forward to hearing the MA’s explanation at the Tribunal. The MA appointed surveyor said in 2014 the figures were “ at least 50% too high” . He is now nowhere to be seen……. Orf with his head for having integrity and being honest? Oh that would never do for “ Managing Agents In swampland” .
It must have been like shooting fish in a barrel to have such eejit directors to manipulate. Unbelievable!!!!
It appears that the directors abdicated responsibility. As there are so few flats it appears that their worst case scenario is liability for unwarranted costs they attempted to impose on you, plus your costs in contesting these if you are lucky.
In my experience people (leaseholders, not specifically directors) abdicate responsibility mainly in three circumstances:
1. They are too rich to care about having their pockets picked. Any losses are small change. They may devolve management to someone whose success is measured in part at how infrequently they communicate asking for decisions. They may own several properties.
2. Their ability to exercise it is compromised — by illness or higher priority life events; vulnerability (old age); inadequate or no English etc.
3. They have reasons to prefer not to draw attention to their ownership or tax arrangements. What matters about the property is not the operating cost but the liquidity of the asset.
I can’t begin to guess why directors would fail to discharge their duties properly, as they are legally obliged to, but we live in world where the term “constructive non-compliance” is current and fraud and incompetence routinely go not just without sanction but may be carried out by or with the connivance of professionals — accountants, auditors, lawyers and others. (What relief to know that the UK will not become a dystopian society IN FUTURE. With inequality already 2nd worst in the EU there’s not far to go, or is there?)
One lesson from your experience, regardless of the specifics of the case, is that owning property in a building where the directors constitute a majority accountable only to themselves (and the law) has some risks I hadn’t appreciated. And it’s relevant in both leasehold and commonhold tenure.
Re section 20 there are some flaws:
The landlord yes must seek an estimate from the nominated company (nominated by the lessees or RTA) but does not have to use it, merely justify their final choice to possibly fellow industry folks on a panel if lessees complain.
The landlord can go for dispensation not to consult. Open door.
The Court of Appeal tore up the simplicity of s20 creating triggers to consult by putting the burden on leaseholders who feel miffed at not being consulted to prove prejudice. Not as straightforward.
I found this on the spanglefish website :
Chas,
About Peverel can confirm that the defamation case has been brought against Kim by Firstport.
Posted by The Editor on 02 March 2018
Dear Trevor,
Thanks for your comment. I am sure AP/ AF were just trying to be supportive, although they got the facts.wrong. Yes, I would have liked them to ask for my permission beforehand but thankfully we still live in a society whereby folks are at liberty to speak freely. ( albeit they sometimes do not have the facts)
If anybody wants to know who is suing me for Defamation they can turn up on 5th March for the service charge dispute hearing. Open Court, as is the Defamation case.
Of course I do not mind you giving your view to AP/ AF. That is your right!! We are all on the same side fighting for justice and must NOT be cowed.
POWER TO THE LEASEHOLDERS.
First of all, it is very unusual for a “dispute” on another website to spread to this one.
I am personally very uncomfortable in adding a comment concerning About Peverel on LKP and sincerely hope this can be an end to it?
Trevor, you are a person I have much respect for (you know that to be genuine)
For you to respond in the manner you have clearly indicates that you see something that is seriously amiss. For the life of me, I can’t see it?
It appears that About Peverel were under the impression that Firstport were the litigants, when it was in fact former Firstport staff.. From what I can see About Peverel immediately corrected the error.
I don’t see how in any way this undermines any case? After all the litigants are a matter of public record (if any one chose to find out?)
Neither can I see any “suggestive comments”to heedless out who it was?
Why? What would be the point apart from trying to help Kim with her case?
Simply put, whatever her case, if it could be established that the litigant had acted in a similar manner towards another leaseholder that surely would be of help to her case.?
In any of the posts I can see no details about the case so I cannot personally see any possible damage being caused?
Indeed in a personal capacity i have agreed to appear as a witness on behalf of Kim (should she so desire)
From About Firstport – “Dear Editor.
Goodness , gracious. I believe your comment so uncalled for.
I will not be commenting further. It is up to you whether you make this comment public.
I have decided to refrain from ever again posting on AP / LKP again.
I shall campaign against the injustices of Leasehold and FOR strict regulation of managing agents in my own capacity.
I do hope your contributors have signed the online petition by the NLC.”
It is up to you whether you publish this my final post.
Posted by Kim on 05 March 2018
What is going on? How did Kim’s case go?
David, personal message to you from Kim.
She will not have findings from the tribunal for 6 weeks. Seemed to go well but it’s small fry stuff.
The Defamation case is due In Oct/ Nov 2018 and despite the unusual and once again INCORRECT assumption on the other site, ( AP) Kim believes herdefence to be “ watertight “ in fighting the Defamation claim.
I want to make it very clear that the reason She has decided to stop posting on LKP et al online websites is simply because She has decided to stop posting. She believes LKP to be a great force for good.
No deep philosophical reason for her departure. She is quite capricious. Kim hope that clarifies matters for you.
Ciao!
Hello Kim, six weeks, got you. “Small fry” stuff I do not understand, the case itself surely is not small fry, and the verdict must impact on defamation accusation. .Whatever, you are more laid back than I would be.
I don’t know what went on over at AP so I can’t comment but think the outcome a shame. For the record, capricious is a suitable description (of yourself) I think, and from my vantage point, you appear to often act before you think. Perhaps that is why you have fallen out with those over at AP – quite likely they have misjudged you.
Best of luck with your further adventures engaging with our legal system, may you come out of it all with a smile on your face..