[pro_ad_display_adzone id=”11520″ popup=”1″]By Martin Boyd
Roger Southam, the chairman of the Leasehold Advisory Service, seems to have become a little obsessed with finding the Holy Grail. He mentions it in two of the articles he writes for the magazine News on the Block.
In April this year, he explained that leaseholders owning the freehold is “not the Holy Grail”. He reaches this conclusion after spending one day on the LEASE help deck where he concluded:
“a number of the callers were leaseholders who owned their freeholds. This was interesting because I had long thought that owning the freehold as a leaseholder was the panacea that would give the controls and access that is the Holy Grail.”
It is a pity Mr Southam did not take the time to look at more extensive work by LKP or the Competition and Markets Authority, which came to the opposite conclusion. It suggested that many more of those who had control of their site via an RMC or an RTM were happier than those where a third party private freeholder or social landlord controlled the site.
Without any particular evidence, Mr Southam goes on to conclude “the essence is not who owns the freehold but rather how the building is run, how the personalities get on, and how differing expectations are managed … we are dealing as much with social interaction as the legal process”.
In his second article published at the end of last month he returns to his Holy Grail. This time he tells readers: “Service charges will need to be paid whether the flat is leasehold or owns a share of the freehold – or even the Holy Grail of commonhold”.
In this article, Mr Southam goes on the examine why 57 per cent of leaseholders responding to a LEASE survey regret the decision to buy explaining this depressing statistic needs more “drilling into”.
Mr Southam again looks for reasons why this may be the fault of leaseholders rather than the leasehold system, or the actions of a managing agent (such as he used to be, and maybe still is) or the landlord.
Is it noisy neighbours, he asks or maybe buy-to-let investors who have not even realised they have to budget for service charges, he speculates.
Or is it because people do not realise there is ground rent, or is it because they are cross because a landlord has refused permission to alter the flat, he ponders.
Mr Southam again looks everywhere for his Holy Grail except in the direction of the problems causes by managing agents and landlords. His crusade leads him to conclude that if LEASE can just educate leaseholders into understanding what to expect the future will be much brighter.
It is a pity that Mr Southam seems not to have noticed that England and Wales has had leasehold since the time of the crusades, and it is still not understood, still does not work and still has many bits that are broken.
The rest of the world has abandoned this imposed tenure for a more co-operative solution a long time ago. A solution that produces a better market for everyone.
Even a simple understanding should make it clear to Mr Southam that owing a share of the freehold, or being part of a commonhold, will have much higher probability of providing the best solution for the customer, the building and the managing agent because:
1) There is no third party looking to make a profit from just owning the site;
2) There is no third party looking to make an unjust profit from providing services to the site. So no “accidental” insurance commissions, no dodgy utility bills, no landlord-related companies to help maintain the site.
3) There is every possible interest in keeping the building in good condition in both the short and long term.
4) There is much more of an incentive to help develop a community to work together.
5) There is far more likelihood that in the event of a dispute both sides will be willing to mediate rather than head for their lawyers.
The key word is probability. There is no simple solution to provide the right answer; there is no Holy Grail, there is no grand design.
No matter what solution we have for multiple occupancy buildings there will be occasional failings, but that does not mean we should continue with the lie that somehow leasehold is not broken, or the silly idea that we just need better educated leaseholders.
Maybe the first thing we need is better educated managing agents.
Given the problems encountered by Mr Southam at Taylor Wimpey London sites, he might care to look in the mirror before advising others on how to make things work in this sector.
Promoting the idea that its all about education is much cheaper that looking for long-term solutions.
There was a sector-wide initiative to help promote leaseholder education that started earlier this year.
It appeared under the acronym “Educating RITA” which stood for “Residential Information Training Alliance”. The project was due to involve a wide number of groups representing both leaseholders and providers in the sector.
Nothing has be heard of Rita since March, and it was subsequently explained by the Leasehold Advisory Service that it had had other priorities, so education is clearly not quite so important if other priorities intervene.
In August 2016, Mr Southam said “I genuinely believe leasehold is not broken” and in March 2015 he had also said “I genuinely believe managing agents’ service levels have improved over the last five years”.
If you don’t agree with Mr Southam’s Utopian vision he has an answer for that as well: “I think there needs to be a new perspective given that maybe the managing agents are not bad, they are just doing their best. If their best doesn’t measure to your standards then it is necessary to get the perspectives aligned.”
Related posts:
Just why is Roger Southam bothering with the Leasehold Advisory Service?
LEASE chair Roger Southam in Private Eye (again)
LKP meets Roger Southam and Taylor Wimpey over embedded management companies
DCLG rejects complaint over LEASE chair Roger Southam, who pledged to ‘maximise ground rent opportunities’ for freeholders
DCLG rejects second complaint about Roger Southam as LEASE chair. He was appointed on merit, it claims
Campaign against Residential Leasehold Exploitation reveals abysmal retirement housing re-sale values
Mr Southam provides further support for Mr Upton Sinclair’s adage “When a man’s income depends on his not understanding something you can count on his not understanding it”.
Perhaps he has no personal experience of being a tenant (not an owner) of a leasehold property with a monetising freeholder but his lack of understanding of the issues in leasehold is not credibly unconnected with how he has earned his living to date.
It’s sad what conflict of interest does to one’s eyesight and, frankly, basic humanity.
The problem arises when Leaseholders are being passed off as Tenants when not. Tenants are the Equity whereas the Lessee owns the Equity.
I also read the article on News on the Block and was -quite frankly – horrified. A response needs to be printed and circulated among leaseholders. Here is someone who not only doesn’t want a solution to leasehold related problems, but he cannot even admit there is a problem. How much do we pay him for this?
We get News on the Block, because we own a small flat with a share of freehold. We also own a leasehold flat, in an identical type of property.
The difference in service charges, general upkeep, management and heart-attack inducing days could not be more different.
Leaseholder, can you provide a little more detail on the differences between the two properties? In particular costs and anything else you can put side by side in a table.
We are trying to interest people in a freehold enfranchisement for our development and have a number of owners who are not convinced it’s worthwhile. Besides issues related to control we estimated a property value difference of 1-2% (we already have RTM). It would be very interesting for many I think to see the figures side by side, freehold and leasehold, for very similar flats.
Please ask admin if they would for word me, your actual name address and email and I will send you the specifics. Consider this though, you may not have any major problems with the current freeholder, but you simply don’t know that they won’t sell to the freeholder/investor from hell. (which is what happened to us). it only takes some shrewd manipulating and your right of first refusal can vanish, or even the freeholder could buy some units and alter the balance. Property in London is no longer about home ownership, is all about investment, big money and leaseholders are viewed as fair game.
Leaseholder, I will drop Sebastian a note if you wish to keep the details private (or if you feel able to share some but not all here–including the sites) but if you feel able do so I think it would be a public service to prospective freeholders to indicate in general terms what the differences were.
For example, you could indicate what percentage premium in sales value the share of freehold property has achieved and enumerate any issues that afflict the leasehold property but not the leasehold site and what the cost differences are annually, and whether they would be abated by acquiring the right to manage (which we have already done).
To be clear, we have a majority of owners signed up to a freehold enfranchisement but are seeking to enroll more in order to reduce the cost to existing participants. If we are lucky, bringing the cost down a bit will expand participation, which will bring the cost down some more etc. until eventually we are left with the hard core who don’t know what leasehold is and don’t care and will never be persuaded.
As a majority of our owners are non-resident, many of whom are overseas investors, most of whom don’t understand leasehold, some of whom don’t read or write English well, it would be helpful to be able to cite real data for valuation differences e.g. All I’ve ever seen is anecdotal estimates.
We did prepare a document setting out the advantages of freehold ownership which I’d be happy to share if it’s of interest. It’s just a collation of publicly available information with some references to our circumstances.
Keep it simple. Having read over 100 case laws from the Inferior Court please note that the cost of a Freehold today reads more like an Estate Agents guide to selling. Only the value of the site applies. Further more check out the Managing Agents as to being Ltd Co’s against Companies House. I write this as I discovered many additional Charges over Leasehold Properties, which were never flagged up at the first point of conveyance. In other words are you paying for their continuous ‘office jolly’ on a grand scale? They place the Charge – and you pay for it.
Perhaps the complacent Roger Southam might care to venture an explanation as to why Rothesy Life have financed Proxima GR Properties(part of the Tchenguiz Family Trust freeholding companies for 645 million pounds over a term of an astonishing 65 years ?
I doubt Rothesay Life are doing it for the benefit of the leaseholder?
Over to you Roger!
Hello, I am reeling from recent AGM where I was dumbfounded at the way the whole process of the AGM was carried forward. Some of the flat owners didn’t attend in spite of my best efforts to get all 6 of there! No big deal you may say: you couldn’t be more wrong. When I calm down I will scribble down my fears, objections and all the rest.