Seventy key figures in the leasehold sector – including some battle-scarred leaseholders – attended a packed Westminster briefing yesterday to hear how leasehold could be reformed.
The meeting was hosted by MPs Sir Peter Bottomley and Jim Fitzpatrick, and chaired by Martin Boyd, of LKP.
It included presentations from Phillip Rainey, QC, of Tanfield Chambers, Ian Fletcher, of the British Property Federation, and Darren Eade, of the Competition and Markets Authority.
Their presentations are reproduced below.
Parliamentarians who attended included Nick Raynsford, Labour MP for Greenwich & Woolwich, a veteran of the 2002 Commonhold and Leasehold Reform Act, Lord Best, who headed the All-Party Parliamentary Group report into retirement housing more here and Baroness Gardner, a stalwart of leaseholder activism.
Among the invitees were senior civil servants, property tribunal judges, an abundance of distinguished landlord and tenant barristers and solicitors, the Law Commission, the CEO and chairman of the Leasehold Advisory Service, CEOs of property management companies and developers.
Baroness Gardner mischievously welcomed the presence of a representative of the Serious Fraud Office at the meeting – perhaps a leasehold sector first.
Phillip Rainey’s presentation was nothing less than a manifesto of legal reforms to the leasehold sector (and will be considered in a separate article).
“It should not be assumed that I agree with all or indeed any of the ideas set out below,” he said. “The intention is to stimulate debate …”
Among the suggestions were:
Abolition of forfeiture, clarify and simplify right to manage procedures, prohibit the grant of leases of between 21 and 999 years to eliminate “the wasting asset problem”, prohibit long leases on houses, regulate managing agents by extending existing Housing (Wales) Act 2014, … and “a modest and non radical suggestion for immediate reform” confer on the First Tier Tribunal the power to consider challenges to exit fees in retirement leasehold.
These suggestions sound joyous to LKP, which prompts the question why it has taken a minnow organisation like us to get them asked?
Ian Fletcher, of the British Property Federation, warmly welcomed the initial work of Martin Boyd, of LKP, which went on to further analysis by DCLG which allowed them revise the official number of privately owned leasehold properties in England to 4.1 million.
“This was a huge phenomenon, with private sector flats constituting just 12 per cent of new supply in 1997/98, and growing to 46 per cent in 2008/09,” said Mr Fletcher.
“In the housing association sector the growth was similar, up from 29 per cent in 1995/96 to 66 per cent in 2007/08.
“Since the turn of the millennium there have been 715,000 flats built in England.
“In addition to the 4.1 million privately owned leasehold properties there are 1.85 million in the social sector, if we take the data from the census and subsequent building. In total that gives almost six million leasehold properties and flats in the private and social sectors.
“…For future development flats will represent a much higher percentage of new build. In most of the major cities flats represent more than 50% of new building and in the capital that figure has averaged 87% of all new build across the private and social sectors since 2004.”
Mr Fletcher also addressed the property issue of flat owners renting out their properties on ultra short-term lets for tourists and business people.
“This has led to a growing industry where residential homes are used for the permanent and consecutive commercial letting of holiday space, the business deriving significantly more in rent than would be derived if the flat was let for use as a home.
“This has led to a significant clampdown in comparable tourist cities like Paris, where new laws have been introduced, and in New York, where zoning laws are being enforced more.”
Ministers are seeking a “middle ground” that does not penalise those who genuinely rent out their flats because of short-term need and those running an apart-hotel business.
Gerry Proctor, of Engage Liverpool, said the practice was certainly not confined to London, and was causing ill-feeling among residents in the city.
Mr Fletcher said the BPF backed the argument that commonhold is a housing issue and should move to DCLG from the Ministry of Justice, where it currently sits.
The BPF also backs including leasehold properties in the government’s Flood Re flood insurance scheme, which has been reported on LKP here https://www.leaseholdknowledge.com/tag/flood-re
Finally, the BPF is “supportive of making it easier to get recognition of a tenants’ association” – a particular obsession of LKP.
And here is an example of a freeholder who spent £74,560 in the property tribunal trying to resist a recognised residents’ association … whose sole power of note is to appoint an auditor to examine the books.
Finally, Darren Eade of the Competition and Markets Authority discussed the recent report into residential property management services.
The issues have been discussed on LKP here
“Leaseholders often feel poorly informed and have a limited understanding of their liabilities when they purchase a leasehold property,” said Mr Eade.
Lack of leaseholder education – which is odd compared with the certainties experienced on the continent where commonhold exists – is a repeated mantra by the sector.
But it is not only leaseholders who are poorly informed, as is demonstrated by officialdom working on a figure of 2.5 million flats six months ago.
“Bad outcomes weren’t particularly associate with small or non-trade association member property managers – complaints were spread across all providers,” said Mr Eade.
The CMA’s recommended legislative changes were to review section 20 regulations and “introduce new powers to leaseholders to influence the appointment of and tendering for property managers short of full right to manage”.
Our sincere thanks to Katherine O’Riordan, of Sir Peter’s office, for organising this event.
The list of delegates and the presentation papers are below: