The Law Commission and officials from MHCLG yesterday visited Charter Quay – the epicentre of leaseholder empowerment – to ask whether it would have been better as a commonhold site.
The Law Commissioner Professor Nicholas Hopkins, who is leading on the leasehold law reviews, headed the delegation, which also included LibDem councillor Emily Davey, wife of LKP patron Sir Ed.
They were given a guided tour by the chair of Charter Quay, a prime riverside site in Kingston, in Surrey, by Martin Boyd, who is also chair of the Leasehold Knowledge Partnership.
It is a complex, built by Tony Pidgley’s Berkeley Group, is a mixed use site that includes the Rose Theatre, several restaurants and shops, and two river frontages – the Thames and the Hogsmill.
Thanks to the efforts of Martin, and those of a core of five or so activists, the site:
- won back more than £500,000 in overpaid service charges to the Tchenguiz organisation;
- obtained a court appointed manager having proved mismanagement;
- bought the headlease from the Tchenguiz group under a the terms of a compulsory acquisition order for £900,000 in June 2013, which had unaccountably been held on the Tchenguiz books of £3.3 million in December 2012 as part of a set of assets against which they had borrowed £74 million;
- Page 5 in 2013 Tchenguiz accounts shows the £2.5 million loss
- In 2017 the freehold for the site was purchased from the developer for £1;
- kept service charges at 2008 levels until the recent building insurance hike;
- the site has been managed by LKP accredited HML Holdings since it enfranchised.
What is astonishing about Charter Quay is that it fought its issues publicly, irrespective of the short-term consequences on property values, and has since shared the knowledge that it acquired to other sites, of whatever size, throughout the country.
Indeed, its experiences are a core part of the formation of the Leasehold Knowledge Partnership.
Charter Quay is worth around £250 million and the site belongs to the residents. Of the 243 leaseholders on site, only 13 do not have a share of the freehold.
In forming the freehold-owning company, A and B shares were issued, which meant leaseholders could buy the shares of the freehold of non-participating leaseholders: it pays a return of around 4-5 per cent.
At any point, the leaseholders can purchase their share of the freehold off the investor leaseholders, which has happened since the site became enfranchised.
The legal set up is still a freehold / headlease / leasehold structure, with a potpourri of solutions to different ownerships that the Berkeley Group invented as they went along.
So the Rose Theatre is a freehold structure, that partly sits on top of the underground car park, which belongs to the headlease, and which has a number of flats above.
It is astonishing that a number of volunteer leaseholders managed to unravel all this, and oust the freeholder who was generating a considerable income from the site.
Charter Quay was by no means alone. The Berkeley Group was most imprudent to sell its headlease / freehold portfolio to the Tchenguiz organisation and there have been disputes at numerous prime riverside sites.
Indeed, two words guaranteed to make Mr Pidgley blanche are: Vincent Tchenguiz.
At St George’s Wharf, in Vauxhall, £1 million was settled on the leaseholders before a court action on service charges.
The experience has made the Berkeley group more cautious about the sale of its freeholds, given the reputational issues involved.