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You are here: Home / Latest News / Time to tell MPs what you think about the Leasehold Reform (Ground Rent) Bill – and why it must not be nobbled

Time to tell MPs what you think about the Leasehold Reform (Ground Rent) Bill – and why it must not be nobbled

December 3, 2021 //  by Sebastian O'Kelly

Have your say on the Leasehold Reform (Ground Rent) Bill

Do you have relevant expertise and experience or a special interest in the Leasehold Reform (Ground Rent) Bill [HL], which is currently passing through Parliament? If so, you can submit your views in writing to the House of Commons Public Bill Committee which is going to consider this Bill

scrutiny@parliament.uk

As we saw with the debate in the Commons, there is still plenty of opposition to the Leasehold Reform (Ground Rent) Bill and the monetisers’ little helpers in the lobbying industry will do their best to nobble it.

The volume retirement housebuilders – primarily Churchill Retirement and McCarthy and Stone – have put up a tough fight to be exempted from the ban on new ground rents.

They won a two-year reprieve, which is quite generous to allow them to continue providing income streams in their customers’ homes to benefit somebody else. And those somebodies are so attractive, with Vincent Tchenguiz through his Tchenguiz Family Trust based in the British Virgin Islands owing the lion’s share (albeit indebted) of retirement freeholds, including the pre-2010 McCarthy and Stone freeholds.

MPs want to hear from anyone who has “relevant expertise and experience” in the Leasehold Reform (Ground Rent) Bill.

That might include families who bought leasehold homes with aggressively escalating ground rents, like the victims of Martin Paine (described as a “crook who turns the slease of leasehold into an art form” according to Sir Peter Bottomley:

Affluent freehold-owning couple’s lease terms bring ruin to families who bought flats that are virtually worthless

Or buyers of leasehold houses – a discredited scam of our plc housebuilders which has largely dried up, as a result of LKP’s efforts and those of the National Leasehold Campaign:

Daily Mail on leasehold houses and doubling ground rent scandals

Or overseas buyers suddenly looking at massive bills racked up by debt collectors because they missed the ground rent payment for some reason:

Long Harbour hits reverse on forfeiture to £800,000 flat over £400 ground rent … and JB Leitch halves its legal bill

Or those who bought leasehold properties – and were lent the money to do so by dopey banks – with 10-year doubling grounds, popularised by Taylor Wimpey, Countryside Properties plc and Redrow, among others:

I had to spend £14,000 to change double ground rent to RPI at Ausden Place. But will I get compo from Taylor Wimpey?

Justin Madders, MP for Ellesmere Port and Neston, has taken a lead on these issues:

Englishman’s home isn’t a castle: it’s a revenue stream for an offshore company thanks to national housebuilders, Justin Madders tells the Commons

Leaseholders should submit their views – as soon as possible – in writing to the House of Commons Public Bill Committee which is going to consider this Bill:

scrutiny@parliament.uk

The Public Bill Committee is now able to receive written evidence. The sooner leaseholders send in submissions, the more time the Committee will have to take it into consideration.

The Public Bill Committee will scrutinise the Bill line by line. The first sitting of the Public Bill Committee is expected to be on Tuesday 7 December and the Committee is scheduled to report by Thursday 9 December.

However, please note that when the Committee concludes its consideration of the Bill it is no longer able to receive written evidence and it can conclude earlier than the expected deadline of 5.00pm on Thursday 9 December.

You are strongly advised to submit your written evidence as soon as possible.

Aims of the Bill

The Bill applies to England and Wales. Its provisions, once in force, will restrict ground rents on newly created long residential leases (with some exceptions—see below) to a token one peppercorn per year. This effectively restricts ground rents to zero financial value. The intention is to make leasehold ownership fairer and more affordable for leaseholders.

The Bill makes exceptions for a small number of types of leases: business leases, statutory lease extensions of houses and flats, community led housing and home finance plan leases (either a type of equity release financial product known as a Home Reversion Plan or a rent to buy arrangement). Rent may continue to be charged on the landlord’s share of shared ownership leases, and where it is agreed on leases replacing pre-commencement leases on the remaining term of the pre-commencement lease (known as voluntary lease extensions).

The Bill places a duty on local weights and measures authorities (trading standards authorities) in England and Wales to enforce the Bill.

A breach of the ground rent restriction will be a civil offence for which enforcement authorities can impose a financial penalty of between £500 and £30,000. The money raised through financial penalties may be kept by authorities to fund their enforcement activities. They will also have the power to order the repayment of any unlawfully charged ground rent, plus interest, to leaseholders.

The Bill also prohibits the charging of administration charges in relation to peppercorn rents and makes provision for leaseholders to recover unlawfully charged ground rents through the First-tier Tribunal in England or the Leasehold Valuation Tribunal in Wales. That should deal with this, for example:

Now Israel Moskovitz wins right to charge £30 for his ground rent demands …

If enacted, the main provisions of the Act will come into force on a date to be specified by the relevant Secretary of State. But for retirement home leases (a lease relating to a dwelling that can only be occupied by people aged 55 or over), the Act’s provisions must commence no earlier than 1 April 2023. This is intended to give the retirement sector, where ground rents are often used to help fund the additional costs of providing communal spaces and facilities, additional time to transition

Related posts:

Leasehold Reform (Ground Rent) BillAnalysis of where next with the Leasehold Reform (Ground Rent) Bill The Leasehold Reform (Ground Rent) Bill: opportunities and challenges Leasehold Reform (Ground Rent) BillMake sure ground rents are dead and buried by improving the Leasehold Reform (Ground Rent) Bill Strawberry StarBlatant pro-landlord loophole left in the Ground Rent Bill. Is this the way leasehold ‘reforms’ will go? JB LeitchBlunder forces Pier Management and debt collector JB Leitch to scrap £3,265 late ground rent bill (and forfeiture threat that accompanied it)

Category: Ground rent scandal, JB Leitch, Latest News, News, ParliamentTag: JB Leitch, Leasehold Reform (Ground Rent) Bill

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Anthony Essien (34) APPG (37) ARMA (87) Bellway (30) Benjamin Mire (32) Cladding scandal (71) Clive Betts MP (31) CMA (45) Commonhold (52) Competition and Markets Authority (41) Countryside Properties plc (33) FirstPort (42) Grenfell cladding (56) Ground rents (54) Harry Scoffin (150) James Brokenshire MP (31) Jim Fitzpatrick (35) Jim Fitzpatrick MP (30) Justin Bates (40) Justin Madders MP (67) Katie Kendrick (37) Law Commission (60) LEASE (66) Leasehold Advisory Service (62) Leasehold houses (32) Long Harbour (48) Martin Boyd (80) McCarthy and Stone (39) National Leasehold Campaign (38) Persimmon (49) Peverel (61) Property tribunal (49) Redrow (30) Retirement (37) Robert Jenrick (33) Roger Southam (47) Sajid Javid (38) Sebastian O’Kelly (55) Sir Peter Bottomley (201) Taylor Wimpey (106) Tchenguiz (33) The Guardian (33) The Times (31) Vincent Tchenguiz (43) Waking watch contracts (40)
Previous Post: « Hackitt and Knight back dumping unregulated sector-insider ‘building safety managers’ onto leaseholders at £60,000 a year, MPs told
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Reader Interactions

Comments

  1. stephen

    December 5, 2021 at 6:13 pm

    I note that there is a requirement in the bill to advise the lessees of their rights and amendment 3

    “Before entering a formal or informal renegotiation or extension of an existing lease, the landlord must inform the tenant of the changes introduced by this Act, if the sections of the Act in relation to prohibited rent are not yet in force”

    I believe there is an opportunity for a minor amendment to the bill to help lessees make informed decisions when renegotiating their lease – the NPV of the ground rent retained should be calculated and disclosed to the lessee – this will ensure that the financial burden the ground rent imposed on the property going forward is clearly understood and reflected in the premium paid – this has always been my argument

    In a credit agreement there is the requirement to disclose the APR of the transaction so a purchaser of credit can make comparisons – the ground rent being for no service is clearly a negative burden on the property but is value and implications are not disclosed – by stating the NPV of the rent lessees can focus on what this burden means. The calculation would require the government to set the discount rate but the calculation thereafter is not complicated.

  2. chas

    December 5, 2021 at 11:13 pm

    What tough fight did Churchill Retirement and McCarthy & Stone – have put up to be exempt from the ban on new ground rents.

    Who gave them a two-year reprieve?

    What did they do to allow them to continue providing the income streams,

    I assume you mean when saying Customers Homes you mean the Freeholder/Landlord?

    Why, since David Cameron when PM, was planning to stop these overseas owners, has it proven so difficult?

  3. Andrew Smythe

    December 8, 2021 at 11:19 am

    The Leasehold Reform Bill will hopefully be a start in the process of providing fairness & justice rather than dispensing unfair legalities as is the case at present.

    The situation for leaseholders who wish to pursue any legal proceedings usually find that it is better to pay up and shut up rather than take on a dispute with a freeholding management company who have specialists ready and waiting, specialists who know all the tricks of the trade in order to gain the upper hand.

    I have to say that Stephen seems to be very knowledgeable in these things but it also seems that that the adjustments to the leasehold system he mentions although they may benefit the leaseholder in some small way, does not make the system any fairer.

    The leasehold scheme if used as intended in theory, ‘to provide a lower priced property’ albeit on condition of a rent, but what we have is a complicated set of rules, a set of rules which give the freeholder rights to demand payments for no apparent purpose other than to extract money, and to make other rules for extracting more money, whilst having no responsibilities, and with a legal system which seems to be clearly on their side!

    It seems incredible to me that Mrs Hackitt was ‘shocked’ to find out that leaseholders have no recourse to challenge the demands of freeholders! I was shocked to realise that ostriches were allowed in Parliament..

    A number of previous housing ministers have stated that ‘there is nothing wrong with leasehold’ and now we see the stark reality of how wrong it is, when developers, builders, & Government have all put their heads in the sand, but they won’t have to worry, developers & builders will just put any levies on to the next housing scheme costs, and Government are protected by the same laws as freeholders; and in any case they can lump any costs on to the people who had nothing to with it!

    How long ago was it that Esther McVey then housing minister said in regard to remediation of the cladding scandal that ‘leaseholders must not pay’ … she didn’t last long in that job!

    At present, I hope that MP’s realize that their developer & builder friends along with freeholding management companies have led them into a disaster zone and that all their lobbying has become a cause for concern amongst the voting public.

  4. roland jennings

    December 9, 2021 at 9:24 am

    Is there anything in the proposed legislation to stop freeholders from gouging leaseholders by charging exhobitant fees for insurance and ‘management’?

  5. Martin

    December 9, 2021 at 3:51 pm

    Whilst i’m aware that there are unscrupulous companies out there, i purchased a leasehold property in 1998. My ground rent was explained to me and i continued to pay it each year.

    I also insured through their preferred provider each year until i could choose my own. I found neither the ground rent payment or the insurance to be excessive in any way.

    Eventually i purchased my freehold at again what i feel was a reasonable amount. Had i looked at this property as a freehold back in 1998, i wouldn’t have been able to purchase it as the initial cost would have been too high.

    I do agree that excessive ground rent doubling every few years is wrong but i know that not every company is out there to make a fast buck.

    I feel that a lot of the issues come down to the solicitor, and to some degree the estate agent not clearly laying out how the lease will affect the potential owner going forward.

    I would have no issue purchasing another leasehold property in future, but would ensure i knew what my ongoing ground rent and conditions to purchase the freehold were before signing.

    • David

      December 10, 2021 at 10:46 am

      And we all lived happily ever after. Personally I prefer Beauty and the Beast.

    • David

      December 10, 2021 at 10:49 am

      And they all lived happily ever after. Myself, I prefer Little Red Riding Hood.

      • Me

        December 11, 2021 at 8:09 pm

        Are you feeling OK luvvie?

  6. Andrew Smythe

    December 9, 2021 at 5:34 pm

    Dear Martin…
    You have been lucky.

    I have no doubt that you are right to say that not every freehold management company is out to make a quick buck but as time progresses many of the freeholds have been sold on to the more unscrupulous larger companies.

    Some may have a more sympathetic attitude towards leaseholders but I think that the larger companies who have bought up the lions share have only one objective in mind and that is to extract the maximum using all the tricks of the trade, indeed I have heard stories where although the management company knew they would lose the case in tribunal, still carried on with their attack on the leaseholder in order to make him….”sweat” as they say in this vile
    trade.
    And their is reason to believe that the difference of purchasing leasehold at a lower price is just an artificially made up sum, and there have been cases highlighted by LKP to show that some freehold houses were sold as leasehold for the same amount and being virtually an identical property.

    Has anyone ever seen the accounting of how the cost of a leasehold property is determined? this is another area that has and will never be scrutinised, but you can be sure that the CEO’s will be renumerated with at least 6 figure payments and bonuses.

    Martin, I think you are in a minority, just ask the leaseholders of flats with cladding problems, they had done all they could to be sure that any legal wrangling would be sorted and perhaps you are right in saying that the estate agent and solicitor did not explain the situation in detail, the fact is that the legal system is to blame, there should never be a situation where the owner of the property bears no responsibility and can pass all the costs on to the leaseholder. But they can….and they have…and believe me I know they are a set of B*********s

  7. Alec

    December 10, 2021 at 8:05 am

    …and not only have they been sold on to “the more unscrupulous larger companies”, they have been sold on more often to such companies in criminal breach of leaseholder’s right of first refusal (RFR).

    In the absence of a section 5 notice (from the freehold seller) or section 3A notice (from the freehold buyer) criminal breach of RFR remains and a majority of leaseholders retain the right (regardless of time) to purchase the freehold on like terms to the original (illegal) disposal.

    The Law Commission (LC) has concluded that once proposals for existing leaseholders on commonhold and/or lease extension on “easier and cheaper” terms are passed by parliament, the issue of RFR should become “redundant”.

    With stage 1 of the Leasehold Reform (Ground Rent) Bill going through parliament at present, it is to be hoped that stage 2, to include LC proposals on commonhold/lease extension for existing leaseholders, will follow promptly

    However, whilst waiting, such leaseholds continue to decline in the number of years remaining thus enabling unscrupulous illegal freeholders to peddle “informal” extensions with a Deed of Variation permitting new Ground Rent terms.

    I appreciate this is not what Stephen would regard as an informed choice.

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