A forthright submission to the Law Commission consultation on enfranchisement has been made by a leaseholder on the Isles of Scilly protesting against Prince Charles’ “feudal” Duchy of Cornwall.
Alan Davis, of The Garrison, St Mary’s, who claims about 100 homes on Scilly are affected, bought his modern and unexceptional home as a holiday home in 1983 – becoming his permanent home in 1996 – with 76 years on the lease.
“At the time we discussed with the solicitor the Crown and enfranchisement, but at the time we did not qualify as it was not our permanent home. Since 1996 we have been pursuing the Duchy on enfranchisement by correspondence, petitions, the media and tribunal, to obtain the right to enfranchise.
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“We have been denied out right and with various reasons such ‘as they did not want people coming to Scilly and buying holiday homes’ to a comparison where the Duchy said, ‘they were like the National Trust’.”
Mr Davis claims that since purchasing the property, he has spent considerable sums on maintaining and improving his home.
“The Duchy have not contributed one penny and to add insult to injury, in addition to applying for planning permission, we had to seek the Duchy’s consent.”
The consent fee income, under the terms of the leases, include permission to sublet and the Duchy charges £1,600 pa for 14 weeks permission. “The Duchy do not provide any thing whatsoever in return for their permissions,” Mr Davis tells the Law Commission.
“An unanswered question, is why does the Duchy wish to hold on the freeholds? Is it income generation from ground rents or just the fact the Duchy wish to maintain the medieval feudal system of leaseholds, whereby we are Prince Charles’s subjects and under his control?”
In answer to the Law Commission’s question whether Crown leaseholders had ”encountered any difficulties”, Mr Davis responded
“The privilege Ministers granted to the Duchy of Cornwall is being misused to perpetuate the leasehold feudal system for the Duchy of Cornwall’s own monetary benefit under the guise of a private estate, but the Duchy is a Crown entity.
“The privilege granted to the Duchy of Cornwall should be rescinded, as it has no place in a 21st century democratic society.
“The privilege granted to the Duchy of Cornwall distorts the local housing market and has a detrimental effect on the Island’s economy.”
Prince of Wales challenged on Duchy of Cornwall leases
Tenants of the Duchy of Cornwall are challenging a decision that grants the Prince of Wales rights denied to every other private landlord in Britain. The tenants want to be able to buy the freehold to properties they have leased, in some cases for decades, a right other leaseholders have had since the 1960s.
As all the Duchy’s properties on Scilly have short leases and ground rents above 0.1 per cent, they are not bought by locals with mortgages. Mr Davis says they are closer to 1 per cent, which would be considered onerous by lenders such as Nationwide.
Mr Davis says the Duchy of Cornwall claims the Scilly Isles have been part of the duchy since the 13th century, but he calls this bogus and “fake news”, with arguments about this point being heard in the 19th century.
The Duchy of Cornwall owns property in Scilly, Cornwall and in Kennington, part of Lambeth in south London.
Mr Davis’s full submission is here: ScillyIslesLawCommisionResponse
Prince of Wales in legal battle over Isle of Scilly homes
Alan Davis, secretary of the Garrison Leasehold Group, said: “We are campaigning for the same equal right to enfranchisement as other citizens. Our problem is that our landlord is the Duchy of Cornwall. “The Duchy on its website refers to itself as “a well managed private estate” whose principal activity is the sustainable and commercial management of its land and properties”.
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Mr Davis feels aggrieved that he has had to spend thousands on the property with not a penny from the Duchy. But this is exactly what to be expected under the terms of the lease he took an assignment of. He paints the Duchy as being mean and money grabbing .
He also feels aggrieved about not being able to enfranchise. He purchased in 1983 with 76 yrs left to run . The 1967 Act excluded the Duchy therefore he knew when buying there was no mandatory right and this negative aspect of the lease would be expected to be reflected in the price he paid . Then having bought it at a lower than normal price because of that exemption he accuses the Duchy of malpractice and not being honourable in helping him make a significant improvement in the capital value by extending the lease.
He is then critical of the Duchy for seeking a £1600 fee per annum for sub letting in the summer when very substantial rents can be obtained . He wishes to sweat his asset as does the Duchy . But the Duchy seeking to sweat their assets is considered by him to be wrong
He then says that ground rents of 1% of the value of the property are onerous . Whether a rent is onerous or not depends on the premium paid . If a property is worth £300k with a peppercorn rent but is sold for £200k with a rent of £3k per annum linked to the RPI then that rent is not onerous as the premium was less than normal . Again he wishes to be selective
What for me comes out of all the debate about ground rent, exit fees , service charges , permission fees is that they become an issue when it comes as a surprise.
The need for all burdens in the lease need to be clearly set out and in the case of ground rent a NPV needs to be assigned . All permission fees need to be formularised so a purchaser knows in advance what to expected and crouch their offer accordingly.
Do you think that the 1993 enfranchisement act is justified?
Should leaseholders be able to enfranchise, when they knew that they were buying a tenancy?
Should private citizens be able to compulsorily purchase the property of someone else, the freeholder?
We rationalise these legal somersaults because leasehold has been so abused and is, wrongly, perpetuated in England and Wales. But you do not have to be a radical reformer to be uneasy about the implications of them.
It is also desirable that some leases are sold without enfranchisement rights.
I think there are circumsatamces where enfranchisement ishiuod not apply
A charity may want to help a particular person and grant them a lease but want the property back in a certain number of years to futurer the charities clause . If this is made patently clear at the outset and the price paid reflects this disadvantage then I see no reason why later on this should be considered unfair
It all comes to to open clear disclosure so the buyer makes a proper informed choice before committing to the purchase.
An onerous ground rent can never arise if the terms of the ground rent however unusual and however large or aggressive the rise may be are valued using a prescribed discount rate. Because the value of the rent will be reflected in the price paid for the lease . In many ways very large rents will be considered carefully before purchase and it is more likely that very large rents will be valued correctly and the premium paid for the lease reflects the rent . Small rents if a few hundred don’t get considered properly and that is where abuse can slip in
Do you think enfranchisement is ever justified?
Re comments by Stephen.
I do not sweat “my” asset. I live in it.
Does the asset belong to the landlord or the leaseholder?
Others do sublet and the Duchy require part of the rental paid for 14 weeks. This is now £1750+for doing nothing. The owners must provide all the facilities. These fees are not in the original leases and the numbers appear to have been “picked out” of thin air. Many leases have covenants whereby you must seek permission, but rarely do they give the amounts payable. The cost of a legal challenge is more than the fee and this the Duchy are aware of. The Duchy do not pay their legal fees on challenge, the Treasury do, or more correctly, you the taxpayer.
Finally, it is sad that Stephen has not identified himself. Is he a landlord, leaseholder (duchy?), a legal practice or other organisation?
Alan Davis
Alan
You do not touch on the point that when you took an assignment of the lease it was known at that time that it fell outside the rights given by the 1967 Act and it would be reasonable to assume that as the purchase takes some time to go through that you would have reflected on that negative aspect and offered accordingly.
You state that you live in your property so why should the sub letting fee be of concern. If the lease does not allow sub-letting without consent then why should the duchy be precluded from an enhanced investment return on their investment just as the lessee who sub lets?. Duchy have a value in the reversion and income stream, undoubtably less than the lessee but not negligible so their entitlement is, provided not excluded under the lease, fair. Without knowing the numbers and costs it is difficult to make a comment as to whether the quantum is fair.
What I say should be the subject of interest and debate not who I am.
Stephen
I have again read all your comments and I must assume that you are “employed” by the Duchy to present their case. Your facts are incorrect, as the Duchy took steps to hide their arrangements from public view. It took years to track down the facts and even now we do not know the whole truth behind their leasehold arrangements and their land area exemption from enfranchisement as they now have complete FOI exemption.
The Duchy used to be a benevolent organisation who cared about their tenants, but all that changed in the 1990’s and they have become a very commercial enterprise, which they now like to call a private estate, but in fact is a Crown entity.
Since the announcement on reform there are several groups who say they should be exempt. If indeed there is a good case, then maybe they should have full rights to lease extensions at a peppercorn ground rent and permission fees (if any) that fairly reflect the work involved in giving that permission rather than arbitrary inflated figures “picked from the air”.
As you wish to “hide” behind your anonymity, there is little point in continuing a debate with an individual who clearly appears to favour perpetuating the feudal leasehold system and the unaccountable and secretive Duchy of Cornwall.
Alan Davis