Time Investments is reassuring punters in the ground rent game that the Law Commission’s 137,703-word report on enfranchisement reform has “sufficient clarity or creates additional concern” to revalue the ground rent portfolio.
It would appear that analysts in the sector have echoed the sentiment of leaseholder activists: that the Law Commission enfranchisement report won’t amount to much.
The wonderful thing about ground rents, says Time Investments, is that they are enforceable through lease forfeiture. That’s something else the Law Commission is shortly to reform … or, rather, write a report about.
Related posts:
APPG recognises efforts of Law Commission to improve enfranchisement
Law Commission enfranchisement valuation models delayed for second time as election ‘purdah’ rules kick in
If you want to reform enfranchisement push government hard, is message of Law Commission
Telegraph and Mail attack Nationwide for £54 million ground rent investments
Gleeson tells ground rent speculator Landmark Investments to remove testimonial
Law Commission lost its way with human rights for offshore hedge funds, says BBC’s Paul Lewis
At least they say they are not acquiring any more which is something.
“It would appear that analysts in the sector have echoed the sentiment of leaseholder activists: that the Law Commission enfranchisement report won’t amount to much.”
Mmmmm… not sure how much I agree with that. Or rather I don’t agree that the report is that relevant to the question!
In terms of leaseholder activists… I can’t speak for them but it does not seem to me to be unreasonable of them to assume or fear that it “won’t amount to much”.
In terms of an analyst who is trying to be rational, what are they supposed to say other than “there are a variety of proposals which could each give very different outcomes, and therefore the report is almost irrelevant, the only question is “how much will the current majority Conservative government do to shift money and power from big business and people like the Duke of Westminster and to leaseholders (some of whom are very rich, others are not at all)?”
My views are as follows. The report makes three proposals in terms of valuation methodology.
One proposal is basically retain “marriage value and keep things as they are” (but one could still set relativities and do anything from keeping things precisely as they are to making lease extensions a fair bit cheaper.)
At the other end of the spectrum is a proposal to abolish marriage value (which would appear to me to be unlikely because to do so would cost freeholders huge amounts of money, and would take us, IMHO, to a position that was illogical, unfair on freeholders and potentially in breach of freeholder’s human rights.) [Note – I am not saying for one second that marriage value should be anywhere near the level it is at now, but that doesn’t mean it is not right].
The middle alternative is to replace marriage value with hope value with respect marriage value, and dependent on where relativities were set and what percentage hope value was payable at, it could lead to marginal or significant benefits compared to now.
Effectively the report is saying “we could make things much much cheaper for leaseholders… or we could do one of these other two things which could be done in a way that saves leaseholders significant amounts of money or could be done in a way that saves them next to nothing… that’s all a political decision”.
This is nothing to do with the report, it is quite simply a question of “how much do you think that a Conservative government will shift the balance of power from freeholder’s to leaseholders?”
In the interestests of openness and transparency I value in this field and I mainly work for leaseholders. I think that the current system is “fair” subject to a few VERY SIGNIFICANT caveats.
(1) There should be much greater certainty for leaseholders at the outset and there is no need for the system to be quite so good at allowing Professional advisors to make money.
(2) The law should not be used to drive marriage value and premiums up over time – the law as it stands (or rather it’s somewhat dubious interpretation IMHO) DOES cause premiums to rise over time (other things being equal).