By Sebastian O’Kelly
A few months ago my brother-in-law – who never did anything as unremunerative as journalism – asked my advice on building a penthouse on top of his London offices in heritage Southwark.
It’s where Bridget Jones lives in the films.
As a trustee of a charity dedicated to making leasehold fair, I suggested that he build it commonhold and sell it off to a “hard-working British family”.
Admittedly, this would cause a few issues, given the commercial property below, which needs to be rented out, and the compromise it would make to the freehold title of the building.
Nonetheless, it would all be worth it for the warm, fuzzy glow he would feel in the evening and he would be advancing the cause of commonhold, which needs to be adopted in England and Wales to prevent the endless leasehold monetising reported on this website.
On the other hand … Another course would be to flog it off in the Far East on a 125 year lease, with £850pa doubling ground rents.
Draw up the lease so it includes – as many do – that the leaseholder is “not to use the premises or permit them to be used for any illegal or immoral purpose or for any other purpose whatsoever otherwise than as private residence”.
Then kindly offer to rent out the flat on behalf of the buyer, ideally making this process as informal and opaque as possible.
Install a couple of prostitutes, wait a few months and then tip off the police.
Forfeit the property in a fit of righteous indignation, and pay off the accomplices.
Leaving aside the immorality and criminality of the above, there is a fly in the ointment. Salacious journalists rather like stories about prostitutes and penthouses, so most unwelcome attention might be paid to the case.
Meaning that the scam would be a one-off rather than a repeat business.
Of course, LKP would not suggest for a moment that such a scenario is considered by Bernie Wales, the “leasehold expert”, in one of his webinars.
Bernie Wales is giving a webinar tomorrow evening at 8pm – register here – on splitting up freehold buildings and creating leases.
You will learn “everything about splitting freehold property titles – creating leasehold and efficient leases – and selling residual freeholds for meaningful profits”.
Bernie Wales adds: “That’s going to be hard to do in just 60 minutes, but I’ll do my best!”
It will be interesting to discover whether he recommends adding the clause about “illegal or immoral purpose”.
A couple of years back Bernie attended the LKP’s Westminster roundtable on commonhold. Unaccountably, he was representing the Federation of Private Residents Association.
He describes himself as a “successful entrepreneur” in residential leasehold property management and investment.
Where the sun doesn’t shine
Facebook comments offers some painful suggestions to Bernie …
https://www.youtube.com/watch?v=JjuMa4gdPKk&feature=youtu.be
Bernie Wales’s video is well worth watching by leaseholders: they will at least understand the mindset of the other side.
It is bottom of the pond property asset management, but an echo of the practices of all the major house builders presented with the opportunities of leasehold.
He outlines the main income streams associated with leasehold – ground rents, insurance commissions, management charges, planning gain and reversionary value of the lease expiring – and offers consultancy to make sure that they are done efficiently.
One good point is that he emphasises that leaseholders are tenants – no estate agency nonsense here of “virtual freehold” or describing leases as home ownership. But then Bernie Wales wants to stress the impotence of leaseholders to make freehold investment attractive to his audience. This may not be nice, but it is accurate.
After developers or investors have carved up an existing freehold property into flats, Bernie is offering a service to “tweak the lease to enhance the freehold value”.
He can also find freehold buyers, or he suggests property owners can go into joint venture with him.
Obviously, homeowners caught up in leasehold disputes are going to hate all this.
And Bernie Wales skims over ground rents rather too quickly as a legitimate rent that leaseholders have to pay. There is no coherent justification for ground rents at all: developers and freeholders have charged what they think they can get away with, which is why Nationwide this month refused loans on ground rents of more than 0.1 per cent.
But the question here is the same as that facing my brother-in-law.
Flats are going to be fashioned out of existing buildings.
How do you do it, and what sort of saints are around who will deny themselves the income streams that leasehold – unique in the world – offers them in England and Wales?
The point politicians and civil servants need to grasp is that flat ownership does not need to be this complicated. Those with the greatest financial stake in a building – the flat owners – should control it.
Commonhold would bring this asset management to an end.
Related posts:
Taylor Wimpey more greedy than the ground rent ‘Mr Smallweeds’ (and so are other plc housebuilders)
Leasehold rip-offs are ‘legalised extortion’ by housebuilders, says Chartered Institute of Building
Housebuilders ground rent scandal compo schemes ‘must go further and faster’, says housing minister
Cramlington: The wet dream of housebuilders, where everything is sold leasehold
The Sun attacks ‘fatcat’ housebuilders with inflated fortunes thanks to Help To Buy
Bannister Preston and Cohen Filippini Solicitors ‘errors’ over ground rents, says BBC
My email to Bernie this morning after receiving the invitation to join his webinar.
Dear Bernie – just a note to let you know how deeply unimpressed I am that you are continuing to recommend that people should be selling off freeholds for residual profits.
You came to one of the Westminster round tables on the subject of commonhold, representing the FPRA a couple of years ago. You are part of the problem that the Leasehold Knowledge Partnership,
Campaign against retirement leasehold exploitation and the National Leasehold Campaign are trying to fix – all of whom you are more than well aware of. The APPG had 71 MP’s on board at the last count, and will be re-assembling after
the General Election. Screwing leaseholders is no longer conveniently hidden under the carpet.
You should be promoting commonhold, not perpetuating the idea that leaseholders can continue to be ripped off by developers selling off freeholds to dubious investment companies, here and
overseas. They should not be encouraged to extort money from first time buyers, using doubling ground rents clauses and permission fees – especially those being helped by the Government
Right to Buy Scheme. Taylor Wimpey has already had to put it’s hands up and apologise…… Houses should always be sold freehold, never leasehold. Selling these freeholds, using developer
recommended solicitors to camouflage the financial implications, is nothing more than a scam.
Melissa
Melissa has also drawn attention to Bernie’s article here:http://berniewales.co.uk/wp-content/uploads/2013/12/Freehold-to-Leasehold-Remember-Shaving-Foam.pdf
“Not to use the premises or permit them to be used for any illegal or immoral purposes”
Is not illegality and immorality the whole basis of leasehold?
Strange this, as one could go and gain a licence from the Council so as to work from home – not on the streets. Very odd clause indeed.
A shameful promotion of legal exploitTion. Shame on you
Watch Bernie on YouTube telling you how make money via leasehold.
https://youtu.be/JjuMa4gdPKk
Then why not leave your comments under his video?
Thanks for bringing attention to this Melissa. It SHOULD be unbelievable but sadly it is all too believable and spot on with exactly what has been happening for years.
WHAT A CREEP THIS MAN IS!!!! I seem to remember not liking him many years ago for some comments but cannot remember where or why!! Unfortunately rather than feel ashamed of what he is doing he comes across as being very proud of it and making a nice little earner thankyou. An absolute disgrace but highlighting ever more the disgusting world of leasehold!!
Shaving my legs will never be the same again !!!
Shame on him
Makes me so cross
“Not belonging is a terrible feeling. It feels awkward and it hurts, as if you were wearing someone else’s shoes.”
Not that I would ever wish to cause trouble (especially for such a nice chap as Bernie Wales) it may well be a good idea for someone to contact the legal department at Gillette concerning the video.
I am not sure they will be too happy about seeing their products being associated( in any way) with the methods of exploiting the public. Nor I suspect did Mr Wales obtain permission from Gillette to use their image in a film.
Would it not be a shame if a multi billion pound company with such a high reputation to protect were to sue Mr Wales for breach of copyright?
The mere fact that immediately on seeing the video Katie Kendrick made a comment about shaving her legs indicates that those watching the video have made an association with Gillette.
Please note.I have been campaigning on the unfairness of leasehold for many years.
In that time i have come upon many unexpected situations that have taken me by surprise.
That said, nothing that has happened before surprises me more!
A few months ago I had never even heard the name Katie Kendrick.
Now, not only have I heard her name, I am even posting comments about shaving her legs!
Oh I say what a good idea Mr Epstein!
Ha ha. This made me chuckle !!!
And I take on board what you have said and will action it accordingly.
Katie
[Redacted] … Owing to irrelevance and lapse of taste
Oh dear! Ok it was irrelevant but lapse of taste? Me??Never….
Clearly not learnt her lesson then?
No she hasn’t.shes an absolute disgrace that Kim…
Tel- 01932896000 . Proctor and Gamble. Ask to be put through to their legal department and ‘Release the hounds’ on Mr Wales. Make sure you download the evidence before he deletes it.
I have a screen shot of Bernie and the Gillette products should anyone require it.
Well done – Copyright Infringement – lovely
Bernie is just a dilettante compared to our freeholder. Get in touch with me and I can show you how to evade the law and fleece the leaseholders properly. If the government doesn’t do anything to reform the current abysmal situation, I may start running special “fleeceholder” seminars myself. It could be rather profitable, you know what they say.., ifyou cant beat them…
I like ‘fleeceholder’
Yes please DO invite him to the next meeting! I would so love to meet chat to this little weasel. I do know people that have subscribed to his seminars and have the course information etc that he is touting around, so this should be (Trump time!) very very very interesting!