Tory MP Stephen McPartland has successfully shamed Long Harbour / Adriatic Land into varying 15-year doubling ground rents that trapped young families in unsellable, shared ownership homes.
Last month Mr McPartland raised the issue in the Commons of 130 shared-equity leaseholders at Six Hills House in Stevenage being unable to sell their properties.
But yesterday the beneficial owners of Adriatic Land 5 Limited – who hide their identities behind nominee directors of the Sanne Group, headquartered in Jersey – agreed to vary the leases so that the ground rent rises with RPI.
Long Harbour manages a £1.4 billion fund of residential freeholds.
‘Unfair’ flat owners rent fee to be cut
A flat owner who faced being “trapped” by ground rent charges that double every 15 years has spoken of her relief that the fees will be cut. Conservative MP Stephen McPartland raised the “unfair” arrangement affecting 150 homeowners at Six Hills House in Stevenage in Parliament.
Mr McPartland told the Commons:
“Long Harbour claims to be investing in residential freehold primarily for pension funds, but there is no evidence of this, and there is a belief in the wider industry that predominantly hedge funds and speculators are behind it.”
In November last year Long Harbour executive Richard Silva told the Communities Select Committee that it turns over £4 million a year and makes £350,000 profit.
Mr Silva said that Long Harbour manages the freehold to 4,165 onerous leases where the ground rent doubles at 10 or 15 years.
The fund has 1,807 Taylor Wimpey doubling ground rents – including leasehold houses, which Long Harbour purportedly does not approve of – and 911 of these leases have converted to RPI.
Long Harbour says £200 is the average ground rent across the portfolio of 160,000 freeholds. This ground rents bring in £32 million a year in ground rents, benefitting, it claims, blameless UK pension funds.
In spite of Long Harbour being a relatively small company, it benefitted from the involvement as a director of Canadian billionaire Frank John Sixt, of the giant conglomerate Hutchison Whampoa in Hong Kong.
Mr Sixt resigned as a director of Long Harbour in November 2014.
He was also a director, along with several Long Harbour directors, including founder William Waldorf Astor, of Long Harbour Hutchison Water Limited, which was dissolved in June last year.
Communities Select Committee lifts the lid on the residential freehold racket
The offer to vary the leases at Six Hills House is hardly ideal as the ground rents are high – and shared equity is difficult to sell at the best of times – but it does mean the leaseholders have a chance to move on.
That is good news for Holly, 34, who has a shared-ownership flat in the block, which meant she could “move on with my life”, she told the BBC website.
Holly, who wanted to be known by her first name, said she had been trying to get the matter resolved for months.
“Then it gets raised in Parliament and a short-term resolution is being arranged,” she said.
“I was in limbo before but now I should be able to sell my flat and can now move on with my life.”
Mr McPartland said:
“I am pleased Adriatic Land has come to the table to find solutions. It is a fantastic step towards a fairer deal for leaseholders.”
Referring to the article does anyone know if the review changes to ground rent increasing by RPI changed to every 10, 15 or 20 years ?
Ground rents rising every 15 years is still widespread on help to buy new builds. Shameful to think government has encouraged first time buyers with help to buy and left them in properties that can not be sold.
What can leaseholders do to get these rip off doubling ground rents changed ? Any advice gratefully received.
Ask their MP to intervene and write to the freeholder to change the terms. There are few MPs who are against the government position on onerous terms. Negotiating with the freeholder themselves may introduce more punitive events fees. Some instances the leaseholder had to pay the freeholder legal fees on conversion. Onerous May mean the review periods or indeed the ground rent charge. I.e. over 0.1% of property value. Probably worth checking with mortgage lender they are suitable new terms. Just hope your MP isn’t feckless Boris Johnson.