Sir Peter Bottomley, freshly re-elected as a Conservative MP by the voters of Worthing West, has attacked the Wellcome Trust for advancing its aggressively monetising lease extension practices in the courts.
Sir Peter was commenting on an article addressing the Wellcome Trust’s investment finances, which include a £25 million gain on backing the pound before the election. The Wellcome Trust is often described as the world’s second largest charity after the Bill and Melinda Gates Foundation.
Britain’s biggest charity has made a profit of about £25 million by betting on the pound over the past few months – a consolation prize after a year in which UK assets acted as a drag on investment returns.
Sir Peter left the following comment:
Many see the aggressive expensive action to rearrange the price of lease extensions as wrong. The trustees should consider how ethical their actions have been.
Had I been one of them, I should have challenged them.
Rather than subject readers to the joys of hedonic regression, let us trust that the Law Commission, government and parliament our an end to the expense, the worry and the unfairness of the present situation.
Sir Peter’s reference to hedonic regression – the mathematical model here deployed to value lease extensions – is a reference to James Wyatt, the chartered surveyor who went to the Court of Appeal to challenge the freeholder-friendly mathematical modelling which makes lease extensions so expensive.
The models were all commissioned by the big London residential freeholders and, unsurprisingly, are hugely advantageous to them. Mr Wyatt is proposing a fairer model, called Parthenia, which relies on data that has not been skewed in the freeholders’ favour.
LKP director Sebastian O’Kelly added a further comment to the Times addressing the Wellcome Trust as a residential landlord:
Sir Peter Bottomley makes important points.
The leasehold system is unbalanced. It would be encouraging if freeholders did not abuse powers.
But Wellcome Trust spent £114,000 to get £6,000 service charges out of a truculent non-paying leaseholder. Of course, costs against her under the lease.
In no other area of civil law does it makes sense to spend so much for so little, but the freeholder’s costs are guaranteed under most leases.
It was bullying. It was disproportionate. It ruined the leaseholder. It ensured the others in Onslow Square paid up. Forfeiture may have been avoided when it was clear this would be public.
So, if even an organisation as otherwise saintly as Wellcome over-deploys the powers available, surely we are not wrong in arguing that the fast-expanding leasehold sector – which is creating a 100 more dukes of Westminster – needs sorting out?