Sebastian O’Kelly addresses retirement property managers. Were you lynched? No, they agreed: leasehold ‘granny flats’ have no future

Not a single voice was uttered in favour of the leasehold volume retirement flat model at the annual conference of the Association of Retirement Housing Managers last week.

The keynote speaker was Sebastian O’Kelly, joint trustee of LKP and director of www.BetterRetirementHousing.com, who said:

“The era of knocking out “granny flats”, loading the leases with sneaky fees and flogging off the freeholds to murky speculators is not the future.”

“Granny flats” was the unendearing term used by a pioneer of retirement housing to describe his leasehold product.

Throughout the day no speaker disagreed with this statement, and many – including leasehold sector commentator Jeff Platt and barrister Justin Bates – appeared to agree with him.

The report of the conference is on www.BetterRetirementHousing.com here:

ARHM cannot see a future in traditional ‘granny flat’ volume retirement sales – Better Retirement Housing

Annual conference hears why renting, mutuals or guaranteed buy-back schemes are more attractive than leasehold flat sales Not one attempt was made to defend the volume retirement housing business model as it came under sustained attack at the annual conference of the Association of Retirement Housing Managers last week.

Curiously, on the day of the conference, McCarthy and Stone announced its plans to enter the retirement rental market with housing association Places for People.

Places for People to manage funds for retirement house builder

Inside Housing, news, analysis, and comment about the social housing sector in the UK.

The invitation to Mr O’Kelly was an astonishing about-turn for the ARHM, as he has been critical of the organisation – substantially funded by FirstPort.

He told the conference in Stratford-upon-Avon:

“I pay tribute to the men and women who work in retirement property management. I think that it is appropriate that we, who are critical of the sector, do so.

“You are the intermediaries, serving the freeholders who appoint you and for whom, perhaps in some cases, you may have as much enthusiasm as we do.”

The invitation to Mr O’Kelly was an astonishing about-turn for the ARHM, as he has been critical of the organisation – substantially funded by FirstPort Retirement – in the past.

He told the conference in Stratford-upon-Avon: “I pay tribute to the men and women who work in retirement property management. I think that it is appropriate that we, who are critical of the sector, do so.

“You are the intermediaries, serving the freeholders who appoint you and for whom, perhaps in some cases, you may have as much enthusiasm as we do.”

Public disgust at leasehold practices – at their worst with the elderly – has prompted political intervention, with Communities Secretary Sajid Javid expected to announce his initial response to his investigation into plc housebuilders foisting doubling ground rents on their customers.

Sebastian O’Kelly said:

“Who would have thought the boring issue of ground rents would appear on the front page of The Times?” Tweeted one prominent leasehold sector insider.

“Well, I think one should turn that question round.

“Here we had plc housebuilders selling first-time buyers toxic leases on houses that should not have been leasehold in the first place – and now cannot be resold because mortgage lenders won’t touch them. 100,000 flats and houses are blighted as a result, according to Nationwide.

“The builders were aided in this process by generous dollops of taxpayers’ money through the Help To Buy scheme – supposedly designed to expand home ownership, particularly among the first-time buyers. In many cases, they came off short-term tenancies that they could at least walk away from, and were then steered onto leasehold long-term ones with the most egregious wealth-eroding terms.

“The conveyancing solicitors recommended to buyers by housebuilders – in some cases “approved” by developers – appear to have acted as little more than stooges in this racket, failing to highlight lease conditions that are, frankly, outrageous.

“Then the housebuilders flogged off the resulting income streams in the freehold to anonymous speculators who hide their beneficial ownership behind nominee directors, and who are often based offshore.

“Along the way there were quite a few fibs by the sales staff, notably that the buyers of these leasehold properties would be offered to purchase the freehold.

“The offer never came good.

“So, my question is: who but a leasehold sector insider would not recognise that a national scandal of this sort would get front page treatment and that the wider public would be utterly appalled?”

With now 127 MPs and Lords in the All Party Parliamentary Group, Mr Javid ordering a second consultation on property management, and Justin Madders MP pushing forward a Private Member’s Bill to allow that qualifying leaseholders be able to purchase their freehold at no more than 10 times the annual ground rent – leasehold reform is gathering pace.

“None of these actions would have come about had it not been for the activities of the Leasehold Knowledge Partnership.

“At last the failings of leasehold that we have been campaigning against are out of the long grass – beyond the Office of Fair Trading, the Competition and Markets Authority, the paper-shuffling stakeholders’ forums with civil servants – and are now being addressed by a less anaemic forum: national media, politicians and the public at large.

“From that mix something substantive will emerge, either from this government, or perhaps its successor.”

“We have no idealised view of commonhold. For sure, people being people they will bicker and argue and litigate amongst themselves as they always have done, and perhaps let the building run down a bit to save money. Does that matter much?

“No, they will be problems of their own causing and the consequences will be borne by them and resolved by them, just as they are in every other country in the world apart from England and Wales.

“Let’s be clear on this: we think that the leasehold system is fundamentally wrong; that its adoption in England and Wales is anomalous; that the rest of the world does not make property ownership so complicated; that it gives a green light to the unscrupulous to monetise people’s homes; that it is incorrect to equate long term tenancies – leasehold – with property ‘ownership’.”

Nonetheless, Mr O’Kelly – who stayed in Stratford at Margaret Court a guest of retirement housebuilder Bob Bessell, of Retirement Security Limited – spoke in favour of retirement housing as a concept.

“It is a good thing that the elderly live communally in housing where they can mutually support each other and socialise, particularly if they have been recently bereaved …

“It is good that the elderly downsize and sell their large and unused family homes. This frees up the housing market for future generations.”

But there have been numerous scandals, evidenced by two Office of Fair Trading investigations.

One resulted in FirstPort / Peverel running a price fixing racket to cheat 65 retirement sites into buying expensive electronic door entry systems from its subsidiary Cirrus.

Back in the 1990s McCarthy and Stone unsuccessfully sued The Daily Telegraph for £1 million over articles alleging rip-off service charges.

McCarthy and Stone and a media firestorm in 1991 – Carlex

The Dispatches programme on Monday night is not the first time McCarthy and Stone has been in the eye of a storm. In 1991 in launched a disastrous High Court action against the Daily Telegraph claiming £800,000 damages over articles about service charge fiddles.

Mr O’Kelly also addressed the offshore ownership of

“But far more valuable than the exit fees were the sale of the freeholds themselves, and the lucrative management contracts that that involved. Particularly lucrative, in fact, if the freeholder actually owned the management company providing the service, which was then the case.

“I am not going to dwell on this, but I do feel retirement housing would be … well, less complicated if the bulk of the freeholds were not owned by a supposed family trust based in the British Virgin Islands.

“Similarly, I am sure that there are many older people who would be more comfortable if the jiggery-pockery of high finance were not somehow involved in the freeholds of their homes.

“Many find these practices very unfamiliar and uncomfortable in the country that they thought they knew.”

The speech reference the anger of the property tribunal that Eric Matthews, 94, a former World War II squadron leader, had to waste what time remained to him fighting inflated insurance commissions at Strand Court, in Rye.

It ruled that the acceptable commissions were zero.

How a wartime squadron leader, 94, downed Peverel – Better Retirement Housing

Eric Matthews, dealing with irritants aged 94 Interview with Eric Matthews on the Channel Four website During the Second World War, when Eric Matthews, 94, was an RAF squadron leader, he was used to chalking up downed enemy aircraft. Now he is celebrating another victory over a lesser adversary: Peverel, which has had to pay back £11,475.34p.

Mr O’Kelly went over the OFT’s “pathetic and tokenistic” ruling that thousands of pensioners had been cheated in the Cirrus scandal – and that everyone involved got off scot free.

“The only criminal sanction threatened during the entire process involved the pensioner whistleblowers, who were warned not to blab to the press during an OFT investigation.”

Peverel cheated pensioners in £1.4 million tenders at 65 sites, says OFT – Better Retirement Housing

now ALL sites should exercise right to manage and be rid of them … ‘the system is rotten’ to have allowed Peverel / Cirrus to get off, says Bottomley UPDATE: Guardian reports OFT / Peverel / Cirrus scandal UPDATE: BBC reports Peverel / Cirrus price-fixing scandal The Peverel / Cirrus price-fixing scandal was finally confirmed by the Office of Fair Trading today, which found that retirement leaseholders had been cheated in tenders worth £1.4 million.

The speech also addressed the issue of the right to manage application of Elim Court, in Plymouth, which was finally won in the Court of Appeal earlier this year.

This was also addressed later in the conference by judge Siobhan McGrath, who heads the property chamber.

“Look, too, at the sites that have gone right to manage. In the main they are examples of successful and harmonious communal living, where the third party monetiser has largely been stripped out.

“It takes a lot for a retirement site to be provoked into opting for right to manage, and with perhaps as many as a fifth to a quarter of the residents infirm, dying or in fact dead the hurdles involved in pulling it off can be considerable.

“Although we deprecated the wisdom of Elim Court in Plymouth fighting on for its right to manage in the Court of Appeal earlier this year, we are absolutely delighted that it finally won its five-year marathon.

“Otherwise the legal costs butcher’s bill could have been extremely high: in fact, to the point of endangering the leaseholders’ continuing ownership of their homes.

“Had that happened – I say this to those involved in the legal smart aleck-ery of derailing right to manage applications – you can be pretty certain that that, too, would have ended up on the front pages and been discussed in Parliament.

“It is thoroughly depressing – although sadly inevitable – that tripping up right to manage has become a cottage industry for legal practitioners in this sector.”

Elim Court: If you want right to manage, this is how NOT to go about it – Better Retirement Housing

Elim Court in Plymouth has escaped from its right to manage debacle by the skin of its teeth, having been led to near ruin by right to manage facilitators. After having had its right to manage application turned down in the lower tribunal (freeholder’s costs: £10,000) and then thrown out by the upper tribunal (freeholder’s …

Finally, Mr O’Kelly praised other business models, such as the ExtraCare Charitable Trust and the Methodist Housing Association, both of which buy back retirement flats at 95 per cent of their value.

This spares purchasers’ families from the catastrophic falls in value seen with the volume housebuilders.

“Indeed, do these actually need to be property purchases at all? Some believe a “licence to occupy” similar to schemes in Australasia would be a better solution. Others say they might as well be members clubs or hotels, which they more closely resemble.”

There was a surprising degree of support for this view.

The day after the conference, Mr O’Kelly attended a sector event and said he had been speaking at the ARHM conference.

“Did they try to lynch you?” he was asked.

“No,” was the reply. “Astonishingly, they seem to agree with much, most or even all of what I had to say.

The retirement housing sector seems to be changing very fast.

Sebastian O’Kelly addresses the retirement property managers. Were you lynched? No, they agreed: leasehold ‘granny flats’ have no future – Better Retirement Housing

Not a single voice was uttered in favour of the leasehold volume retirement flat model at the annual conference of the Association of Retirement Housing Managers. The keynote speaker was Sebastian O’Kelly, joint trustee of LKP and director of BetterRetirementHousing.com, who said: “The era of knocking out “granny flats”, loading the leases with sneaky fees …