The following today from the Pinsent Masons law firm website:
The package of leasehold reform measures, which follow a recent government consultation, also includes plans to make it cheaper and easier for existing leaseholders to purchase the freehold on their property. The government will also take action to ensure that leasehold property cannot be classed as an ‘assured tenancy’ just because the ground rent had increased above a certain threshold.
The ban on new leasehold houses will require primary legislation, the effect of which the government intends to back-date. It will prevent developers from avoiding the ban on new leasehold houses by taking new leases of development sites themselves after 21 December 2017, the date that the consultation response was published. However, whether the retrospectivity will go further than this and ban the sale of leasehold houses altogether after 21 December 2017, subject to limited exemptions, is not entirely clear. The government has stated that it: “will ensure that future legislation to ban the sale of leasehold houses applies to land that is not subject to an existing lease at the date of publication of this consultation response” and that it will “continue to work with the sector and other partners to consider the case for exemptions to the policy and its retrospective application”.
“Given previous comments made by the government on this issue and recent adverse press highlighting some undeniably unfair and unreasonable terms that appear to have been imposed by some developers, the announcements are not surprising,” said property disputes expert Paul Pinder of Pinsent Masons, the law firm behind Out-Law.com. “The government’s detailed response acknowledges, however, that exemptions from the ban on the sale of leasehold houses will be required, but it appears to still be formulating what those exemptions will be.”
Full article:
Ban on ‘almost all’ new leasehold houses in England to have retrospective effect, says government
The package of leasehold reform measures, which follow a recent government consultation, also includes plans to make it cheaper and easier for existing leaseholders to purchase the freehold on their property. The government will also take action to ensure that leasehold property cannot be classed as an ‘assured tenancy’ just because the ground rent had increased above a certain threshold.
Related posts:
Leasehold houses to be banned and future ground rents set to zero, announces Sajid Javid
Daily Telegraph reports the new-build leasehold houses ban
Daily Mail on leasehold houses and doubling ground rent scandals
Number of leasehold homes is DOUBLE the figure the government believes, says the Leasehold Knowledge Partnership
Leasehold houses to be outlawed, says the Daily Mail
Mail and Telegraph pile on the misery for Persimmon’s Jeffrey Fairburn (Good, says LKP, he deserves it)
I am a little surprised/concerned about some of the words used in the article from Out- Law.com
“Under the leasehold system, property owners own their homes for a fixed period of time” (own their homes???)
“The price payable by a homeowner for the freehold of their house” (homeowner?? What do you own, just a document called a Lease I thought)
Also, yet again, the government is not prepared to make an actual commitment to stop tax payers money being abused, which they could have done, overnight, months ago.
“The government will write to developers before the planned legislation is in place to “strongly discourage” the use of Help to Buy equity loans for the purchase of leasehold houses” (has the government not just got the ability to just stop the scheme being used to purchase leasehold)
Trying to limit comments to save ink but…
No lawyer self but wouldn’t for a second anticipate the government would (could?) retrospectively ban all leasehold houses already existing prior to the consultation, as distinct from what they said: retrospectively ban any that try to rush to market after the date published?
Mr J relies on moral arguments over legal ones so I don’t rely on what his Ministry says..
The ship sailed long ago on false terminology as to property ownership. Seems the ‘industry’ prefers to call leasehold ‘ownership’ until after you sign that long lease and find out the truth: you only own a leasehold title and in law be still a tenant.
As for joined up planning, It is alleged that Sajid Javid wants to make it easier to build more flats on top of existing ones. No mention of the wishes of the home owners if their are leaseholders.
Now that will be a grand innovation for disruption and higher communal costs when done and rendering all the existing apportionment percentages in chaos.
But think of all the profit for the minimal investor freeholder?
As the Mother Superior might have said recently: “I think we’ve all just lost a little respect for you there, Sajid.”
The one thing that lawyers never consider is for the abolition of leasehold in all cases, making leasehold the exception – as in the rest of Europe!! Everything they say tries to”normalise” what already exists. They all support this fiction that a freeholder somehow “deserves” compensation – for the £5000 he was able to pay for ownership of the land and eventually the house? OK. I will pay him the £5000. Compensation he does not deserve. A law that allows some third party to take possession of someone’s home for next to nothing is contemptible.
Thus far(apart from exceptional circumstances concerning land ownership) no defence of leasehold has raised any reasons for the continuance of leasehold that could not be addressed by a form of common hold. It really does appear that the sole motive for continuing leasehold is purely to make profits for freeholders.. A not for profit freeholding entity which leaseholders have shares in addresses all the issues raised by defenders of leasehold, since the freeholding entity will be able to enforce all covenants and collection of service charges etc…
And of course the ending of leasehold would prevent the acquisition of freeholds by largely off shore companies who derive income from effectively appointing themselves (or closely connected companies) as managing agents . I strongly suspect that had Peverel/Firstport not been “gifted” thousands of development management contracts, or had not been “gifted” leaseholds on house manager’s flats and instead had to compete with other managing agents for contracts, they would not be the company they are today?
Once upon a time, when life was first spawned on this planet, we all lived happily ever after. Then along came the serpent to proffer the apple of all consuming knowledge and sophistication, it has been downhill all the way ever since.
I once engaged with an ill-bred and uncouth chap of little education. My verbosity being superior to his, I wiped the floor with him. His response was to punch me in the mouth, he won the engagement. But it wasn’t violence that won the day, it was morality that won the day. My friend might well have been born in a hovel, and been educated no higher than on the mean streets of Liverpool, but he had class, and couldn’t tolerate bullshit.
Might I be so bold as to suggest that all of the members of our government, all of our parliamentarians, all lawyers, indeed all experts and professionals, be punched in the mouth. I go further, they should be pummelled to the ground and then repeatedly kicked until they agree to abolish our leasehold laws, and with retrospection.
No more bullshit, no more jargon, no more fudging, action now.
Hear Hear! Now where did I put my knuckle duster?.
We all know you are a street fighter, Kim, and can be relied upon when the going gets dirty, but there will be few alongside of you, and none behind.
David, I have always believed that one should enter into action with boldness.If one is doubtful or hesitant it affects ones execution.Timidity is dangerous.
Everyone admires the bold, no one honours the timid, although if one is unsure of a course of action, do not attempt it. Doubts and hesitation will infect the execution.
My view might not be deemed terribly “ girly” or “ Ladylike” but so what?
Incidentally. 5th March Tribunal Hearing re “ unreasonable” Major Works sinking fund malarkey.
Date for the “ Defamation “ / “ Harassment” case at County Court London RCJ to be determined. I shall keep LKP posters updated.
In addition to my previous comment. I should like you all to pack a sandwich box and pitch up for the 2 day Hearing.
I am unaware of a previous case whereby a Managing Agent has sued a client for “ Defamation “ / “ Harassment” so this could be a test case. I have contacted several newspapers to notify them of the proceedings. I want to shine as much light on this case as is possible.
Fasten your seat belts……….
Noted, I knew of the defamation/harassment proceedings, but not of the Tribunal hearing. Michael Epstein suggests the first will not go ahead, I hope he is correct, keeping a straight face once whilst engaging with our judiciary is enough for anyone, twice is asking too much.
Kim,
If it does come to court(I very much doubt it will) I wish to offer myself as a witness for the defence.. I give permission for the editor of this site to pass my contact details to you, or alternatively you may contact the editor of About Peverel for my details.
Thank you for your support Master E. It has been noted!
I see the Guardian is tonight reporting tribunal told 95-year-old resident of Croydon Citiscape block allegedly in hospital after being told he had to pay a share of the £2m bill for repair works? Meanwhile lease seemingly unsellable to get out of the dilemma.
Freeholder allegedly tells tribunal not obligated?
Probably legally sound statement given how English long leasehold was designed by Parliament knowing exactly what it was creating.
Reassuring in context that we hear Sajid Javid and his Housing Minister both repeatedly offering Parliament moral arguments? That’s okay, then. Who needs law?
Guardian also reports Tribunal judge expressed sympathy for the “really difficult situation” lessees in. Ominously reminded all (moralisers included?) that his jurisdiction was limited in law.
Matter of lease interpretation. Who knew? Not -apparently- the government?
I think we might hazard a guess where this is likely going?
Unless judge can find unreasonableness for use of fire wardens instead of alarms? But this presumably would not assist for cladding replacement?
I read case as effectively push at government to come up with funds for cladding issue. I would agree with this.
THAT surely is the real moral argument here, Mr Javid and crew?
Irony is, if courts find leaseholders liable, legal costs could also land on them if lease worded such. Then if unable to find £2 million, presumably freeholder could forfeit. No moral obligation not to, Mr Javid?
What would be the relief against forfeiture over a £2 million bill unpaid?
Forfeit enough leases, and this could possibly fund the cladding repairs by allowing the freeholder to sell fresh new leases once work done?
Neat solution?
Isn’t UK leasehold a truly marvelous invention?
Surely now ought to be enough evidence to see all leasehold tenure banned immediately, and converted as Michael describes above?
I would not hold one’s breath too long, mind.
Leaving aside the fire risks this issue must be solved decisively and quickly otherwise these lessees will spend years of their lives arguing and waging war with agents and freeholders . There will be no winners and the bitterness will manifest itself in all aspects of their lives.
I think the government should step in a loan the money to the lessees on a case by case basis (I cant see that they can simply give it) at a very soft rate of interest recouping the funds on eventual sale – not ideal but if the interest was say 3% then for £50 per month (assuming the average loan was £20k) the problem goes away
Until it is solved the flats are worth a fraction of their correct value, they live in fear of fire and or the service charges and with a very heavy and angry heart
(Ink low but invested in new pencils – did you know there are at least 12 different grades?)
Hi Stephen,
Based on the unreasonable and unfit law as stands, your suggestion that government should loan funds to leaseholders on ‘case by case basis’ (which I assume you mean means tested?) sounds almost reasonable at first glance.
There is a huge however or it wouldn’t be leasehold.
When ordinary citizens buy property they rely on experts: legal sorts and those beloved of tribunals: surveyors (how tribunals love to see these latter sort argue endlessly at the expense of the hapless lessee).
Given conveyancers have had their feet held over the flames about doubling ground rents cannot be likewise blamed for not noticing types of cladding, what of said surveyors and their so-called ‘expertise’? RICS is usually front and centre in leasehold matters?
Non-expert citizens who pay for a home buyer survey might be forgiven for thinking an expert might at least notice the building was clad? Hard to miss that. Do surveyors not know about types of cladding or fire standards? Do surveyors report on the difference between communal parts surveyed and demised parts?
Then there are the building inspector experts. And the regulator experts. And the government experts who designed the whole regulatory framework of experts. Are they all innocent of liability when whole buildings burn down for want of proper fire standards?
As to the communal parts, I read somewhere that freeholders may be arguing it is for individual lessees to claim under a new build warranty if applicable?
Cladding is attached to the exterior, which is not a demised part. Ipso facto cladding forms part of the retained freehold, no? A communal part.
No lawyer self, but can’t see on what basis demised lessees can argue with NHBC about the exterior walls that the lessees do not own?
Everything about English long leasehold is legal smoke and mirrors, and when push comes to shove, turns out there are no ‘experts’ to hold liable either? All ‘reasonable’ costs land on the lessees and ‘reasonable’ goes a very long way in leasehold la la land.
Mind you, I doubt Stephen that the present government would even lend lessees money, let alone at a reasonable interest rate. Possibly would argue they have to ‘protect the public purse’ and charge ‘competitive’ rates? Too busy helping corporate types anyway. ‘Priorities, dear boy.’
On the other hand, it seems t’Treasury will ‘lend’ money to the defense budget for the armed forces to have essential kit, so anything is possible in these unusual days.
Paddy, You have made some very salient points.
So the cladding needs replacing as it is not safe. That is accepted. That it was passed as being safe when it was fitted (ie a buildings inspector signed it off as safe) is accepted.
That the owner (the freeholder) must make their property safe is accepted.
The issue then becomes “Are the costs of the replacement cladding to be charged to leaseholders?”
Were they just the managing agents the potential liability of Firstport would not be an issue?
Disingenuously, Firstport refer to their managing agent role and gloss over any role as a Landlord they may have?
So who should pay(someone has to?)
Is it the Freeholder, the managing agent (in its capacity as landlord) the leaseholder (as part of a service charge) or the NHBC (if the property is within the guarantee period), or insurance companies if not?
The assumption rather glibly put about is that it was only after the Grenfell Tower tragedy that it was discovered that the cladding was a fire risk
This is wrong.. Following a fatal fire in North Ayrshire for which the rapid spread of the fire was blamed on the cladding the Scottish Parliament brought in laws in 2003 banning its use.
Following a fire in 1999 a parliamentary committee issued a report in 2000 warning of the inherent dangers of this type of cladding.
So now I ask, given these circumstances, would it be reasonable for a developer,/ building inspector to be aware of the inherent dangers of this cladding?
If it is judged to be a reasonable assumption, the liability must then fall on the developer/building inspector as they would have failed in their duty.
It may be as I believe was the case at Grenfell Tower, that the originally specified cladding did not pose a risk (and was signed of as such) but to cut costs a lower specification cladding was subsequently used , in which case the developer is liable.
When we purchase a property we should have a survey.to make sure all is well?
When did the current freeholder purchase the freehold of the building and did they conduct a structural survey which may have revealed the faulty cladding?
Another matter that needs to be resolved is to determine if the replacement cladding is “maintenance or improvement?” If judged as “improvement” leaseholders cannot be held liable.for the costs.
An option is the insurance route. Of great concern is a post balance sheet statement issued by the NHBC, which may indicate that so great would be the extent of any claims against them, the NHBC themselves may have to cease trading. (one to watch!)
Unlikely i know but here is a potential scenario ,should it fall to leaseholders to pay through service charges.
They refuse or can’t pay. the freeholder/managing agent has to pay initially and then take legal action against the leaseholders..They take sue for forfeit of the lease. In court it is judged they are liable to pay, but the judge is so incensed by their plight he orders that the lease shall not be forfeited provided leaseholders pay over the whole term of their lease?
Or let us suppose(worst case) the leases are forfeited? What then? The freeholder will of course have the leases back , but will still have to pay for the replacement cladding. and of course such leases are only of any value if someone purchases them. And who would?
It may be of interest if the freeholder and managing agents were asked to produce proof that should they lose in court they do have available funds to replace the cladding?
At present the freeholders have been re-financed after defaulting on loan agreements. The managing agents have a negative net value of £-35,000,000 and have just cancelled shares (which effectively takes £9,000,000 of” financial obligations” off their balance sheet.
This is set to run and run! . .
Master E I think you should send your post to the Newspapers.
The clarity and substance of it will make the “ ordinary Joe” affected by this scandal sit up and think.
The Newspapers are chomping at the bit to take a bite out of Property Spivs and deservedly so.
Sorry people, whilst I have every sympathy in the world for leaseholders I would totally object to the government lending my money/taxpayers money to fund the cladding problem.
It is the Freeholders/actual owners of these building that should be footing the bill.
Following on from there, these same people, should they see fit, should take the appropriate manufacturers/inspectors etc to court in an attempt to recover their costs.
After all, the vast majority of these freeholders have wealth beyond belief. It should work both ways.
Year on year you make a fortune but sometimes you have to spend some of your money on the thing that made you loads of that money.
Stephen, you say “Leaving aside the fire risks this issue must be solved decisively and quickly otherwise these lessees will spend years of their lives arguing and waging war…..”
Ha, so whats new there then, no change is there
I agree Trevor Bradley
Hey folks apropos to the online petition for “ STRICT REGULATION OF MANAGING AGENTS/ ABOLITION OF LEASEHOLD. We have almost 7500;signatures. SO WHAT. I hear many of you cry- there are 3 million plus leaseholders in England and Wales.
However, we must take into account the apathyof the masses………..
Mister Javid’s Consultation garnered 6,000 supporters which he declared a momunetal result. We have exceeded that amount.
Thank you Katie Kendrick founder of the NLC. You are a woman with cojones. More Boudicca than Barbie!!!!!! My kinda gal.
I have just realised what a pithy soundbite is. Feel free to use it. I think it’s great!
Ooops. Meant- Javids Consultation garnered 6,000 contributors not supporters!! I thought I had better clarify just in case “John” is out of bed again and on the rampage……. Naughty I know but couldn’t help it.
Not sure that “What I really meant to say was……..” will go down too well in court, but as a Woman and ‘Of colour’ you will probably get away with it.
Nurse, John is out of bed and has forgotten to take his meds!!!! ????????