Senior Tory MP Sir Desmond Swaine has pleaded with the Communities Secretary to consider exempting volume retirement housebuilders from the ban on new ground rents.
The MP for New Forest West – coincidentally not far from McCarthy and Stone’s Trump-style HQ in Bournemouth – asked in the Tuesday housing debate:
“On new build leaseholds, is my right hon. Friend prepared to consider an exemption for the retirement market where retirement living has particular requirements? Is he prepared to meet a delegation of hon. Members to discuss that?”
LKP / BetterRetirementHousing.com suggests Sir Peter Bottomley and Jim Fitzpatrick, who are familiar with the retirement housing sector, tag along to make sure this obliging bit of commercial lobbying has an alternative voice.
Last month McCarthy and Stone was claiming that it was “caught in the crossfire” of the reform of leasehold: in fact, it is one of the causes of the campaign to end them. It has even produced a leaflet arguing for the retention of ground rents circulated to putative buyers.
The company’s historic freehold book is in the hands of the Tchenguiz Family Trust, based in the British Virgin Islands, and is still selling freeholds to outfits such as Adriatic Land, which are often based offshore and hide their ultimate beneficial ownership behind nominee directors.
The Adriatic Land companies are managed by Will Astor’s Long Harbour £1.6 billion ground rent fund.
McCarthy and Stone has 70 per cent of the retirement housing market. 4 per cent of its revenues come from selling ground rents – £27 million last year – and they account for rather more of its profits.
The business model of Churchill Retirment, which actually belongs to the McCarthy family, is very similar.
ARCO snubs McCarthy and Stone / Churchill by saying there is no need for ground rents – Better Retirement Housing
The trade body the Association of Retirement Community Operators announced yesterday that ground rents are “not essential” in retirement housing and it backs the government in ending them. The announcement directly contradicts McCarthy and Stone and Churchill. Both have argued that they need ground rents for the viability of retirement housing projects and without them …
But other retirement housing providers including Legal and General, which are part of the Association of Retirement Community Operators, deprecate ground rents and deny that they have any purpose in the viability of retirement housing schemes.
The APPG on leasehold reform has invited McCarthy and Stone CEO Clive Fenton to address the ground rent issue at the meeting on July 11.
I believe Sir Desmond Swaine’s New Forest West constituency does actually include New Milton which contains the Firstport headquarters.
As Firstport have ended up managing several retirement developments as a result of highly contentions provisions contained in the leases of many of the older McCarthy & Stone retirement developments, any change in leasehold law that swings the balance back in favour of leaseholders will inevitably severely impact Firstport.
It might have been prudent for Sir Desmond Swaine to declare that he may well have a vested interest in this matter?
The imposition of a ground rent with the Net Present Value if the rent shown next to the premium paid with the discount rate being set by the government enables a buyer to see the impact of the rent and decide whether to accept the package or negotiate it out
This whole issue of onerous rents has arisen from the failure to correctly value the rent so a purchaser can make an informed choice
It was started at the LVT in 1997 by a nefarious group of four men backed by a struck-off Conveyancing Sol. He continued in in law as proven by the case laws. This is the how to….
1, Work together in trust/Trust
2. Learn how to manipulate via case laws
3. Never mind early mistakes as these can be remedied ; serial LVT attendees
4. Set new case law precedents
5. Enjoy a perpetual residual income with an established Timeshare template
6. All hail Future Monies based in offshore tax havens….
Good quality retirement housing is essential but I fear for those elderly people who enter into these contracts at a stage in their lives when they may not be able to grasp the complexities of the contracts they are entering into. Surely of all the recent abuses of modern day Leasehold retirement housing must be the model that is above reproach and easy to understand given the potential vulnerability of the customers? Given this company dominate the market yet their competitors say Ground Rent is not needed I would question why they are wedded to this model. How can it be right for pensioners freeholds to be sold offshore?
You are so right. I live in a Churchill Retirement block with unbelieveably exorbitant Ground Rent. A few other ‘owners’ and I make as much noise as we can about being ripped off twice a year,
but alas many of our co-owners are people who are not used to challenging injustices and although they complain amongst themselves, do not take it any further.
Incidentally, a friend and I asked for an appointment with Churchill’s CEO, Spencer McCarthy to discuss their justification of these Ground Rents, but were summarily and quite rudely refused. Our MP Gillian Keegan has not kept in touch with us since our meeting with her and is very hard to get hold of, although a member of APPG, hopefully she will be more responsive as things hot up.
If the contract terms are correctly drawn and the legislation provides appropriate back up then it should be irrelevant as to who owns he freehold
For many years mortgages were packaged up and sold to investors in this country and abroad. The fact a mortgage is held by a syndicate in say America does not concern the borrower as they know the contract is governed by the terms agreed and there is various safeguards imposed by the courts through legislation and agreed industry practices
There is a massive difference between a Lender using their own monies for a Mortgage Loan – v a securitised Mortgage.
These Mortgages are drawn from internal funds provided by Third Parties. Invariably these funds are from Ground Rents.
The Council for Mortgage Lenders makes it plain that all Mortgages are under the Law of Property Act 1925 – this moot point is ignored when the Lessee defaults for whatever reason.
With the creation of s totally new settlement then the Settled Land 1925 gets a dusting off the shelf, unless you are a Leaseholder.
What is really needed here is to move in to contract law and force the move forward for Criminal Law not just civil.
When I was training to be a Valuer in the late sixties, I was taught that any reversionary interest beyond 60 years according to Parry’s Valuation Tables had no value. The current Net Present Value approach is a farce and does not represent value in the property market. Essentially it is an accountancy fiddle and has no place in property valuations.
In your early days as a valued discount rates were a lot higher as interest rates and inflation were at much higher values than now and indeed at 60 yrs the reversion is worth little
With the collapse in interest rates the value of he reversion is relevant at terms of upto 100 urs
If Sir Desmond Swayne is a real thinking MP , he should be supporting the interests of his constituents including all those leaseholders who voted him into office to represent their interests.
I am sure the Retirement Home Developers and Managing Agents like M& S and Peverel/Firstport etc
did not vote for him to be their MP.
Sir Desmond Swayne has an obligation to stand behind Sir Peter and APPG and ask his constituents to voice support for ending the leasehold system.
Ollie, So glad you said “if”, but pigs might fly. He is obviously far too close to Retirement Property builders in particular I would guess it is the volume builders, McCarthy and Stone and Churchill who have persuaded him to act this way.
Whilst on the subject of McCarthy and Stone, I have just received an answer from the Advertising Standards Authority to my complaint.
Which was about M&S continually calling leaseholders Home Owners in their advertisements and other articles.
The ASA decision is as follows.
“After carefull consideration we will not be taking further action.
Advertising is considered to be misleading if it causes a consumer to make a decision they would not have otherwise have taken.
Whereas I recognise that it is the opinion of yourself and LKP that such terminology misleadingly implies a freehold, in assessing an issue like this we need to take into account how consumers are likely to interpret an ad. From a consumer understanding perspective, we do not consider that these terms are likely to be interpreted as solely referring to the purchase of freehold property. For these reasons, the ad does not break the rules on the basis you suggest.”
Are there any consumers who are reading this who would disagree?
Not half. This is a half-baked conclusion. Are there other arguments which can be put to the Advertising Standards Authority?
I understand First Port have sold off 277 House Managers Flats to Residential Secure Income for £31 m They have agreed to rent back these house managers flats until they can persuade residents to change from having a residential house manager.
We have been told we will be changing from Appello to a different company who are more efficient . I always thought Appello belonged to First Port