LKP has asked a number of groups in the sector to provide copies of their submissions to the government consultation on “Tackling unfair practises in the leasehold market”.
Many have been happy to assist, while other groups regard their submission as confidential. We’re also waiting for the submission from the House Builders Federation.
We’re happy to publish other submissions from groups working in the sector.
It is normal for govenment consultations to be overwhelmed with input from providers in the sector. However, on this occasion there have been over 6000 responses, so a large proportion may have come from consumers.
Not everything has gone smoothly in the consultaiton. Although it applies to England and Wales (at least in part) and to existing houses as well as flats, that was not made clear by the government. Had they done so it seems likely that the number of responses would have been even higher.
A number of themes has emerged from the responses:
- Nobody is defending the most unfair lease terms which have been used over the last decade. However, nobody seems to have come forward with a viable solution for those who have been affected.
- Almost everyone agrees that there should be better regulation, particularly of managing agents.
- There seems to be a worrying lack of factual understanding of how the sector operates, even by august groups such as the Civil Justice Council.
- A number of assertions made by providers in the sector are unsupported by evidence.
- The small number of organisations who are expected to be “balanced” in their view, or even supportive of the leaseholder’s point of view, appear to have chosen to pull their punches on occasions.
- Some of the submissions from those organisations in the supply side of the sector have chosen, at least in part, to give some level of balance. Others are candidly partial.
- A number of submissions by providers in the sector suggest some form of voluntary code of conduct going forward, despite the fact that there is no evidence of any previous inclination in this regard.
- None seems to propose what to do about the problems already caused by the sector over the last few decades, which remain unresolved.
- There is a lack of ambition evident in many of the submissions from providers. Few offer any suggestions not already proposed by the government. None mention the other unfair practices in existence which are not already listed in the consultation.
- A number of responses from providers demonstrate a disinclination for change. This is perhaps to be expected given that many of these suppliers are the ones who have a vested interest in the abuses available in the existing system.
- There seems to be a huge divide between what the suppliers in the sector believe might be needed and the views of consumers.
- Almost all the provider side of the sector accept that things are wrong but they all point the finger at someone else as the cause of the problems.
- The review of commonhold is welcome by some who it might be assumed would be less than keen, but others are inexplicably agnostic.
We have only included one submission on behalf of leaseholders, i.e. that from the National Leasehold Campaign. Unlike providers they have no difficulty in pointing to various other unfair practices within the sector which have not been listed in the government consultation.
Submissions
All Party Parliamentary Group on Leasehold and Commonhold Reform
Anthony Collins Solicitors
The British Property Federation
Building Societies Association
https://www.bsa.org.uk/BSA/files/a8/a893ca4f-188f-43f6-a708-20b99b2f267a.pdf
Conveyancing Association
And in details here:
SLC response to the Government’s consultation on ‘Tackling unfair practices in the Leasehold market’ – Society of Licensed Conveyancers
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Council for Civil Justice
House Builders Federation
HBF submission – Tackling unfair practices in the leasehold market
Law Society
LEASE (Leasehold Advisory Service)
National Association of Estate Agents
National Housing Federation
National Leasehold Campaign
NLC Response to Government’s Leasehold Reform Consultation
Royal Institution of Chartered Surveyors
RICS response to Leasehold consultation – final
Shelter
UKFinance –Council of Mortgage Lenders
Related posts:
Countdown to take part in Sajid Javid’s consultation
Full government report on ‘Tackling unfair practices in the leasehold market’
MHCLG website dumps leaseholders’ responses to consultation, says NLC
MPs tell government consultation: End leasehold houses. Scrap new ground rents. Ignore pleas for self-regulation. Ban Help To Buy on rip-off leaseholds
Respond NOW to government consultation to reform leasehold
Leasehold dystopia
Having read many of these already I dipped into the Collins summary and stopped at “the very real opportunity” allegedly to provide affordable homes less the cost of land. ??
Does anybody know the “reality” here? Presumably there are published records of how much it costs developers to supply a block flats versus the sale prices of all the leases on that site?
The Land Registry will show prices sold and £3 would buy the title extract with signed dates for each lease. Where are the costs published per site?
If Collin’s “very real” opportunity is factual I would be impressed to find that the figures prove developers sell at a loss? How else could the cost of the land be excluded from the cost of the lease? It would follow that developers are going bust if they can’t sell the freehold to break even?
Why do I find this hard to believe? Too cynical?
I spent a large part of my working life compiling shipping documents which had to comply exactly and precisely with letters of credit. After being released from The Priory I vowed never again to read papers with even a hint of legalese. I also have an aversion to constructed consultation questionnaires, that leaves me pretty much stymied. Not really, sophistication is a cloak to disguise all manner of crimes and deceits. I did read this from Anthony Collins Solicitors, “with the important qualification that any new protections don’t prevent the very real opportunity that exists to reduce the cost of housing by separating the value of land from the cost of a home and make housing cheaper”.
Anthony Collins Solicitors said before this that “certain recent extreme practise should stop” (I paraphrase). Their position is the classic and predictable position of one with a professional vested interest – firstly, it is a damn bad show what has been going on recently, it has discredited the perfectly decent and honourable leasehold system. To back this up they suggest that, by separating land value from value of buying a house, this enables more people to buy houses as the initial cost to them is that much cheaper.
My instincts have always been that leasehold houses have never been cheaper than freehold houses, more informed people than I (like LKP) have more than instinct to go on, they know this to be the case. Leasehold is a device to extort yet more money from home buyers, end of. There is no end to the lengths vested interests will go to defend their money tree of leasehold.
Having read the submission from LEASE surely Roger Southams position in their organisation will have become untenable, as both himself and spouse promote actions which LEASE have indicated are in need of total reform.
I can give some indication of the submission from Taylor Wimpey as they have answered my request for them to disclose it.
They suggest a voluntary code of conduct to ensure ground rents are affordable and will not affect a resale price.
The want the rights of leaseholders in flats and houses to be put on an equal basis.
They want to speed up the process of the First Tier Tribunal and make it fairer to leaseholders.
I also had a reply from Churchill Retirement who say that Ground Rents should be made fairer. They say this although their GR are some of the highest for Retirement complexes, many almost £700 pa.
None of the others I wrote to have been willing to disclose their submissions.
These include. ARHM. ARMA. First Port. Retirement Villages and McCarthy and Stone
I would add that in their submission TW have included the fact that they are taking action to remedy the problem that their actions have caused.
I seem to have missed out on reading a very important article(s)
What MEANINGFUL action have TW taken to remedy the problem (that’s an understatement) they have caused.
Where can I read and see confirmation that all those thousands of people that purchased onerous leases have now had confirmation that they can purchase the freehold for typical original figures of around £4k or less.
Its all “words” and “marketing” in the TW house isn’t it?
Taylor Wimpey have suggest a voluntary code of conduct to ensure ground rents are affordable……… Oh, so they are still going to sell houses leasehold then – for gods sake.
A “voluntary” code, that’s great, everything will be ok then!!
Churchill Retirement say that Ground Rents should be made fairer – oh, ok, everything will be ok when they are “fairer”!!!.
Anybody thought about getting rid of allowing houses to be leasehold (except in extenuating circumstances) and having flats as common hold.
Michael Hollands
Is ‘ Stonehaven’ an offshoot of ‘Mc Carthey & Stone? Just asking…
Admin2: “None seems to propose what to do about the problems already caused by the sector over the last few decades, which remain unresolved.”
What did the LKP propose?
My own submission on that, for what’s it’s worth was:
“1. Forfeiture: Equivalent rights should be allowed reciprocally, jointly to Lessees that suffer from persistently-miscreant Lessors. In these extreme cases, by application to a Court, give them their money back on an inflation-linked basis (without charging them Capital Gains Tax – they will have suffered enough). Or if the Lessor has no money, give them the freehold so that they can appoint their own manager. The underlying natural laws of contract are reciprocal. Allow them to be so in practice, for housing.”
I should add that the ORIGINAL lessor is liable, in contract, throughout the term, notwithstanding assignment of the reversion: Stuart v Joy [1904] 1 K.B. 362
It would follow that if the lease becomes unsaleable, then product liability must arise for the original vendor who drew up the lease (the thing actually being sold, not the house).
gosh – I do have a lot of reading to do in oder to get through this. However should the Housing Minister like to get in touch with me I have some excellent suggestions to simplify the problem as well as raise money for the Chancellor. Money from the few to benefit the many. And- we shan’t be chasing away the innovators and the wealth creators, only the scroundrels!
By way of a possible corollary to the point about retention of freehold NOT being about providing cheaper housing:
It is a commonly held point of view that leasehold properties sold with a share of the freehold are 1%-2% more valuable than those without. Sadly, evidence for this claim seems to be entirely anecdotal and comparable properties with and without a share of the freehold are very hard to find. I spent some time asking valuers for DATA and none was forthcoming.
The more important aspect of acquiring a freehold is removal of an unwanted freeholder (not the landlord, one simply becomes one’s own landlord with continuing obligations to abide by landlord and tenant legislation!).
If there was a
there would be no shortage of evidence of a substantive difference between the cost of leasehold and freehold property. Such evidence doesn’t exist, and the reason isn’t hard to divine. It’s not the cost of property that matters, but the of the right to charge leaseholders additional sums of money for other things entirely: insurance, unwanted or unnecessary major works, and to skim off commissions on services provided, often via endless conflict of interest scams. Since these are largely non-transparent, and as the level of such costs may be a function of scale, the true difference is not necessarily readily quantifiable.
The extent of the pervasiveness of the additional earnings dynamic is illustrated by the fact that, so far as I know, there is ONE managing agent in the industry that works only for leaseholders and only for leaseholders — and is explicit in its reasons for doing so: to avoid the conflict of interest that is rife in the industry (that’s LKP accredited JFM).. All the rest want to get their noses in the trough and are willing to share additional earnings with landlords. And of course all of that information is “commercially sensitive”.
The irresistible nature of those earnings is evident for anyone who has eyes to see and whose vision isn’t tainted by conflict of interest. Ms Rice Davies famous rejoinder applies to all with such a conflict:
Residential Managing Agents Must be Strictly Regulated. When Leasehold is Abolished and flats are commonhold, most ‘ co- sharers’ I believe will not self manage and will opt for a Managing Agent Company.
The dishonest sharks in the Residential property management pool ( which is the majority) will scent blood and bleed the unsuspecting ‘co-sharers’ dry with their nefarious practices.
It is imperative that MANAGING AGENTS are STRICTLY REGULATED
“He would say that, wouldn’t he”, actually “He would, wouldn’t he” – response to defence council at Stephen Ward’s trial insisting that Lord Astor denied having an affair with Ms Rice Davies, and also claimed to not having even met her. I latched onto that famous quote due to the Lord Astor of the time being involved. Of course the Astors are deeply involved with leasehold, are they not?
HBF claim it works for apartments it must work for houses, no it does not. Developers have clearly written the lease and developed a system to fool the average buyer, someone whom relies on a professional to dissect the lease on their behalf, lo and behold not even the buyers solicitors can do it. Because the proliferation of leases has spread unnoticed for so long goes to show how well hidden this was until the homeowners realised what they’d actually purchased. Giving some one the right to dictate what they can and can’t do to their home and paying yearly for the privilege without ever getting anything back for your hard earned money. Yes a systematic change may knock the market but as usual it’ll reinvent itself and carry in, only this time hopefully fulfilling its pledge, just to build homes not, rob, cajole and blackmail customers under the pretext that their doing us a favour.
Having now read more of the submissions linked above, I find myself wondering if they studied or surveyed the real lived actual world of leasehold, or just read some theoretical treatise?
I ought not be shocked that the British Property Federation would say: –
“Leasehold estates have an important part to play in providing ***choice and flexibility*** thereby meeting a wide range of affordability needs, providing greater security around shared services and adding to supply.”
Choice and flexibility for whom? Why “affordability”? Never any data provided to support these grand assertions?
“Furthermore, leasehold tenure can provide well managed and maintained estates.”
This surely is a meaningless statement? What matters is not would COULD happen in theory (even if it could be proved a valid theory), what matters is the lived experience and practice of leasehold tenure.
What research did BPF undertake of consumers? Surely more than opinion went into the response?
Nowhere do you read of CONCRETE (well, bricks and mortar) examples? Personally I have never experienced this happy world of leasehold tenure, or talked to anyone who has. Name them, do please. They would overnight become beacons of hope and think of their resale values!
“What is needed is greater availability of information for purchasers so that they can be confident in what they are buying and its long term financial obligations.”
So it is the lack of understanding by purchasers that they will be fleeced and exploited constantly throughout their ‘ownership’ of a depreciating asset? Fix this and all will be well?
Worth the greatest toot on an old leprechaun’s flute:-
“Leaseholders benefit from having a third party reputable landlord. The landlord has an economic interest in the property and it is in their interest to ensure that the value of the property is maintained or enhanced. A professional landlord has the capacity to maintain high standards of service, as well as the knowledge and expertise to ensure leasehold covenants are enforced and that laws and regulations are complied with. The landlord can act as an impartial arbiter in tenant disputes. ”
What world does the BPF operate in that it can write this stuff? As a leaseholder of 20 years who has lived under SIX professional managing agents and TWO professional freeholders, I still await experiencing this La La Land of professional landlords with their high standards and an interest in the standard of the property.
Did the authors talk to actual leaseholders? Or read any tribunal cases? Or text books? Or law Commission reports? Or Hansard archives? Or visit any leasehold problem forums?
Freeholders and their agents have NO interest in the maintenance of the reversion. Freeholders stand to make more profit redeveloping the site when the buildings fall down or the ‘owners’ abandon their leases at give away prices in despair. Agents stand to make more profit with spending sprees on annual services that do not maintain the fabric of the building.
Bear in mind we have yet to reach the main end of lease phase, which you can diary for about mid-century based on the boom in 99 year terms. Watch out for derelict blocks needing urgent redevelopment and leaseholders desperate to sell their almost worthless leases to the landlord.
One must hope the government is not so stupid as to swallow this stuff.
The other submissions take the breath away. From Shelter to Lease each seems to believe, one must assume sincerely, that leasehold has by and large been fine except for “recent” issues? If only these are resolved all can be well again?
Do they ever TALK to leaseholders? Or read any history? Leasehold has been reported as a disreputable cesspit for many years. In 1998 the government of the day even stated it was unsuited as tenure. It’s as if by constantly denying reality, fantasy can be made real?
It beggars understanding, really does.
“Freeholders and their agents have NO interest in the maintenance of the reversion. Freeholders stand to make more profit redeveloping the site when the buildings fall down or the ‘owners’ abandon their leases at give away prices in despair. Agents stand to make more profit with spending sprees on annual services that do not maintain the fabric of the building.”
So true. This was precisely the situation in our building. Repairs were only ever done once the council issued improvement notices.
I kept paying for repairs which were never properly done. Taking the case to FTT did not help at all, some hasty repairs were carried out prior to the hearing and I lost the case. In any case, the FTT does not have sufficient powers for meaningful penalties, so the judge was more comfortable to pretend problem solved and swept under the carpet.
The freeholder? Who knows who he is, the only person who had ever spoken to him or knew who he was , was his solicitor, who was also responsible for ‘managing’ the building. Other than that the system works really well, why change it, when is so easy to indulge in a little bit of money laundering…
We need a revolution!!